One of the often forgotten issues in retirement planning is the possibility of having to fund long-term care at some future time. Such care is means-tested and most care home residents of means will pay in full for their care. With an ageing population and severe pressure on government finances, this situation is only likely to get worse.
At present, a resident in a council care home must use their own capital to pay for their care until the capital is reduced to £23,000. After that, a contribution is made on a reducing scale until the resident’s capital is reduced to £14,000. This is done by the local council assessing each additional £250 of capital as producing an income of £1 per week. When the capital is reduced to £14,000, no further contribution is necessary.
The value of a house is not taken into account as capital for the first 12 weeks of residential care and is not taken into account at all if your spouse or civil partner continues to live there.