The cost of care home living is leaving up to seventy five per cent of people without any kind of inheritance, due to savings and property effectively draining away, while a parent is residing in a care home.
Some studies suggest do in fact estimate that up to 2 million people in the UK have ended up using their savings and selling the family home to pay for care cover within the last five years.
Furthermore, three out of four people who have parents residing in a care home have suggested that virtually all of their inheritance is lost, meaning that their parents’ hard work has resulted in very little for their families.
Care home costs do not come cheaply, which is certainly what some attribute to the situation with inheritance tax, so what exactly can someone do to try and avoid this?
One way that may work is by having a life insurance policy written into trust. This effectively means that a sum of money (within a life insurance policy) will be outside of inheritance tax and therefore could assist in providing some kind of financial legacy for children upon passing away.
The value of a life insurance policy written in to trust, will vary on the individual but it could be a good way to ensure that your family get something, even if you end up having to use hard-earned savings and property value to pay for care within a home during old age.
While the Government have promised people there will be a cap on the amount required to contribute towards care home bills, this will not come in to force until 2016, which means that in the meantime, nothing will actually change.
If you have to go in to a care home and you have savings or assets, these will be used to help pay for your care.
Obviously each person’s situation will vary depending on their own personal circumstances, but it is food for thought and definitely something that should be considered.
Life Insurance is relatively easy to set-up and with plans for those over the age of 50 up to 80 years of age, it could be a good way to make a regular payment into a plan that will at least mean your family will get some kind of legacy, as well as assistance with paying any debts or funeral costs in the event of you passing away.
No one likes to think of themselves or a parent in a care home, but sometimes this is necessary to ensure your loved ones receive the care that they deserve in old age. It’s just a shame that in order to do so at the moment, the care received is not free.