Coping with care costs – Northern Ireland

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elderly couple

Like many people, you may be concerned about the potential impact of care costs on your finances and your children’s eventual inheritance. Many people seek advice on how their family home and any other savings and investments can be protected if they become unable to care for themselves in their own homes and require either a package of care at home or need to move into a residential or nursing home on a temporary or permanent basis.

Proposals to change care fees announced in the national press will only affect England, since health and social care varies across the UK. So what’s the position in Northern Ireland?

What are the rules around care costs?

The rules around care fees are complex. Broadly speaking, care provided in a person’s own home is not currently charged for but residential and nursing care is subject to a formal ‘means assessment’.

Put simply, if an individual has capital over £23,250 then they may be liable to pay for their care, although a limited number of exemptions do apply. For example, the main home would be disregarded if occupied by a spouse or one of a number of other relatives mentioned in the applicable regulations.

If a person’s capital falls to £14,250, then it will be fully disregarded and the relevant Health & Social Care Trust must meet any shortfall after the individual’s income has been exhausted.

It should be noted that, following a Judicial Review case in Northern Ireland, there is now some much-needed clarity on what is known as ‘Continuing Healthcare’. Put simply, if a person requires a high level of medical care, this cannot be charged for by a Health & Social Care Trust even if it is being provided for in a nursing home. This has been the position in England & Wales for some time but, until now, the position was less clear in Northern Ireland.

How does the means assessment work in Northern Ireland?

The rules governing the means test procedure are contained in the Department of Health, Social Services and Public Safety’s ‘Charging for Residential Accommodation Guide’. A resident will be required to give full details of their income and capital as part of the means test. However, it should be noted that there is no power for a Health & Social Care Trust to assess the financial resources of a person’s spouse or any other third party in calculating their liability to pay for their own care.

Get advice on care fees

Anyone facing a possible liability to pay care fees, , or who believes that they may be eligible for Continuing Healthcare, should always take advice from a qualified professional before completing any formal means assessment or dealing directly with the Health & Social Care Trusts over their finances. It is important to be familiar with the rules, especially those relating to the various exemptions that apply, before submitting any financial information.

Michael Graham TEP is Head of the Private Client Department at Cleaver Fulton Rankin, Belfast, Northern Ireland

The donor’s dilemma

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mother thinking of handing over house

If you are thinking about transferring your house to your children during your lifetime, you should first consider the seven Ds…

  1. Divorce

If any of your children were to divorce then there would be a risk, however remote, that any assets in their name, including your house, could be taken into account in the divorce settlement.

  1. Debt

In the event of any of your children getting seriously into debt or becoming bankrupt then there would be a risk, however remote, that their creditors may seek to force them to sell your dwelling-house in order to discharge the liability.

  1. Death

If any of your children were to die before you without making appropriate provision in their will in relation to your dwelling-house, then there is a risk that their share of your house would pass to an in-law. Indeed, the problem may be compounded if your son-in-law or daughter-in-law should subsequently remarry.

  1. Disagreement

You may subsequently want to sell your house and apply the sale proceeds to buy another house. There is a risk that your children will not agree with your request. In addition, there is a risk that your children may wish to sell your house without your agreement and seek to have you put out of your own home.

  1. Deliberate deprivation

Health Trusts/local authorities have rules against deliberate deprivation of assets. If it can be proved that you deliberately deprived yourself of an asset in order to get government help towards nursing home fees, then the value of your house could be clawed back from your children. There is no time limit on this, although the longer the period of time between your transferring ownership and going into a nursing home, the less likely it is that the transfer will be challenged.

  1. Deprivation feeling

It is very important that you should try and envisage how you would feel if you have given away ownership of your house and other assets to your children. Will you feel deprived? Will you feel out of control? Will this feeling cause you to lose sleep and wish you had not done it?

  1. Doubt

If you are in doubt about what you are doing, it is better to postpone any action until such time as you are sure.

A qualified advisor can talk you through your options, ensuring all angles have been considered.

Peter M Thompson TEP, Thompson Mitchell Solicitors, Portadown, Northern Ireland

I am retiring abroad – what should I do?

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Retirement can be a golden time for many, and the prospect of moving abroad to the sun, or to be with family, can make it even more enticing.

Before you start packing your bags, see our article on ‘How to Prepare for Retirement’. If you are retiring abroad, there are additional factors to consider.

Top of the list will be finances. You’ll need to be confident that your money will stretch far enough, and for long enough, even with exchange rate fluctuations. The climate, the culture and the cost of living will also be significant factors to weigh up, and there are other considerations too.

Estate planning

  • Consider whether any planning you have undertaken in the UK will still be valid in your destination:
    • check with a qualified advisor as to whether you will require separate wills for assets and property held in the UK and your destination
    • if you have taken the step of setting up a Lasting Power of Attorney (LPA) or an Enduring Power of Attorney (EPA), you should check whether it will be recognised in your destination – see ‘Will my power of attorney be recognised abroad?

Medical

  • Arrange medical insurance that’s valid in the country you’re moving to, as well as for return trips to the UK
  • Notify your GP about the move, and check that you’re entitled to healthcare in your new country
  • If you are moving within Europe, you may wish to buy a European Health Insurance Card (EHIC). Bear in mind this may not be valid after Brexit.

Renting out your home

  • Make sure your property is fully insured. Check you’ll still be covered if the property is empty, for example between tenancies
  • Consider appointing a management agent to find and replace tenants, and look after problems that crop up
  • Notify the tax authorities about your move
  • Check with your mortgage provider that you are entitled to rent out your property, and find out what would happen if it is left empty
  • If you plan to sell your UK property in future, you may be liable for capital gains tax, so discuss this with a legal advisor.

Financial planning

  • Notify the tax authorities – otherwise you may be taxed in both countries
  • Speak to a legal advisor about tax implications in the UK, and find out what taxes you will need to pay in your new country
  • Arrange a new bank account in your new country, ahead of your arrival
  • Speak to your pension providers about your move
  • If your pension won’t cover your lifestyle, consider what jobs are available in your new country and if you are eligible to work
  • Investigate property values in your new country, before committing to buy, or even rent
  • Be aware of currency fluctuations if you are going to rely on an income in Sterling and factor in a safety margin.

Speak to a legal advisor who is independent and not connected to any transactions, such as a property sale or purchase, for impartial advice. You will need an advisor who understands UK law as well as the law in the country that you are moving to.

You should also employ a reputable estate agent, ideally who has offices in the UK and in your new country of choice.

How do I prepare for retirement?

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Retirement can be fulfilling for many people, with more time available for family, friends, and leisure. Make the most of it by ensuring you are financially secure for your later years; there is much you can do to plan ahead.

We’ve put together a few tips to get you started.

Calculate your pension income

The first step is to get a State Pension Statement, which should tell you how much State Pension you’ll get when you retire, based on your National Insurance record.

Then you’ll need to add the pensions you have built up during your working life. Almost everyone has had a number of jobs these days, so that may mean more than one pension pot.

If some of your paperwork has gone astray, and you think you are entitled to more pensions, the UK Government has a service you can use to track it down. The Pensions Advisory Service may also be able to help.

Work out your savings

You’ll also need to work out how much savings you have. Check your bank statements, and any building society accounts. If you have ISAs (Individual Savings Accounts), shares or other financial assets, get a snapshot of their valuation and if any are due to mature or expire by a particular date, keep a note of this.

If you have a mortgage, find out when it is due to be paid off, as that will free up some money. It may make sense to pay it off early, if you can afford to, or if there are no heavy penalties.

For both pensions and savings, jot down the total value, and how much income they will produce.

Prepare a budget

Once you have collected the figures for your likely retirement income, it’s time to work out how far your money will go. As a retired person, you’ll have no more commuting costs, but there will be plenty of expenses left to deal with, so estimate how much money you will need from month to month.

Make a note of your regular outgoings, starting with essentials like rent or mortgage payments, utility bills, insurance, food, and your car, if you have one. Work out what you spend on holidays, hobbies, grandchildren and pets. Add some extra for a rainy day, in case of unexpected household repairs or illness.

Clear any debts

If you have debts, your pension will stretch that much further if you are able to clear them. Some debt, including credit cards and payday loans, can be very expensive. Even if you can’t clear it, you may be able to consolidate it into one loan so it’s more manageable. Make sure you get good professional advice before committing to anything.

When to retire

Once you’ve done your sums, you can start thinking of when to retire. Do you want to retire early – and can you afford to? Or would you prefer to work a bit longer, and have a larger pension when the time comes? If you are delaying your retirement, it’s usually worth contributing more into your pension fund, and this may be matched by your employer. Talk this through with your pensions advisor.

You should also discuss your potential investment options with a financial planner, especially if you are withdrawing a lump sum or buying an annuity, which is a way of putting all your pension pots into one, to get an income for life.

Keep your paperwork up to date

Have you reviewed your pension paperwork recently? It is extremely important that you review your pension policies regularly to ensure that, in the event of your death, the lump sum will be inherited, tax free, by the loved one that you have decided to nominate.

It would also make sense to check your life insurance policies, and your will at the same time, so everything is in order and to give you peace of mind.