Care home costs; death tax traps; disinheritance dilemmas; probate procrastinations: just a few stories hitting the press recently. We'll provide professional guidance about each over the coming month, starting with how to ensure end of life care wishes are honoured and nasty shocks about paying costs avoided...
The shocking cost of looking after older relatives is wiping out inheritances, house or no house, reported The Mirror this month. According to a study by Royal London, an average stay in a residential home could swallow up as much as half the value of your home, they report.
"The whole system is a lottery and we need to find better ways of supporting people to cope with these large and unpredictable bills," summarised Royal London's head of protection, Debbie Kennedy.
The study, also reported on by many local papers, The Sun and The FT, provides proof that those in the North of England face the greatest challenge (due to lower property values), and calls on the Government to take action.
We recommend minimising risk now — rather than waiting for such action to happen.
“Minimise risk now. Get a Local Power of Attorney (LPA) and a Property Protection Will Trust...”
Why do I need a LPA? won't a Will do?
Whilst making a Will ensures your wishes are known regarding who you would like to inherit what, as reported by The One Show in the video above, it does not make clear your wishes about:
- How you would like to be cared for, including whether you would like life saving interventions, should doctors or lawyers decide you lack mental capacity to make such decisions for yourself
- Who will take charge of your finances should you become incapable of doing so for yourself
A LPA is a legal document you can put in place now to ensure that the people to whom you grant Power of Attorney can implement choices you've made for yourself. If you do not have an LPA, and you lose mental capacity, it will be the Court of Protection that decides your fate, not your family members, who, like Heather, in the One Show footage above, may even find access to joint bank accounts denied.
What does making a LPA involve?
When you take out a LPA you are know as the 'donor'. The people you want to take care of your affairs are known as the 'attorneys'. You can name up to four.
You can specify — to some extent — how you would like your attorneys to make decisions; jointly, separately (referred to as 'severally') or a combination of both. You can name replacement attorneys, should your original attorneys be unable to act.
You can decide whether you want your attorneys to make decisions regarding life-sustaining treatment (we recommend you discuss with them your wishes regarding this beforehand if you take this option) or whether you would prefer this decision to be made by the medical team caring for you at the time. You could also take the responsibility of this decision yourself by writing an Advance Decision to Refuse Treatment.
You can name up to 5 people you want to notify when the LPA is registered.
You can advise of any preferences you'd like your attorneys to follow. This can be as detailed as you like and we highly recommend taking time to be thorough. We've known people to list the food they absolutely do not wish to be served to them under any circumstances should they go into care and be unable to express their preferences! Do not use words such as 'must', 'shall', 'shall not' and 'cannot' in the preferences section of the LPA form. The law sees such words as direct instructions. If they are included in the preferences section, rather than the instructions section (read on), the Office of Public Guardian will have to remove them. This could delay the registration of your LPA.
You can also provide instructions that your attorney 'must' follow, e.g. "my attorney must not give consent to treatment involving resuscitation." Such instructions have to be possible to follow and legal, of course!
The charitable organisation Compassion in Dying provides an excellent independent fact sheet about making a Health & Welfare LPA. We highly recommend downloading their booklet Planning Ahead: Making Choices for the End of Life too.
To be extra sure that the Government cannot force your next of kin to sell your home in order to fund your care (currently, anyone with assets in excess of £23,250, this includes the family home, may not be eligible for any state help with residential care fees), take out a Protective Will Property Trust too.
“Currently, anyone with assets in excess of £23,250 (this includes the family home) may not be eligible for any state help with residential care fees...”
What is a Protective Property Will Trust?
A Protective Will Property Trust is a legal document that states equal ownership of your home with your partner.
There are three main benefits to setting such a trust up:
1. It is a way to ensure your family are taxed fairly upon your death and are not forced to sell the home to pay Inheritance Tax;
2. It is a way to ensure that you or your partner remain in your family home after one of you dies, and that the people you wish to inherit it, do so only upon the death of both partners;
3. It protects your family from being forced to sell your home to pay for your care costs (with the average cost of spending your final years in a care home being £92,000 in the most expensive region of the UK and £50,000 in the cheapest, it is often the only way).
A survey carried out by Compassion in Dying less than three years ago, drawing on a YouGov poll of over 3000 people, revealed that one in five dying patients receive treatment their friends and family say they would not have wanted, with almost half (47%) feeling their loved one had a bad death.
Crucially, the results showed that formally recording end-of-life wishes has a positive impact on:
- Improving end-of-life experiences
- Preventing unwanted treatment
- Helping to reduce avoidable hospital admissions
We know, from experience, as we are sure do people you know too, that the peace of mind that comes with putting a LPA in place is priceless. We also know that Government policies on Inheritance Tax are not keeping up with the real cost of care in the UK and that those who take action early, by placing their property in a Property Protection Will Trust, save their families unnecessary anxiety and expense.