Posted by: WealthIFA | November 25, 2011

Financial News Update we 25/11/2011

How has your week been?

My diary is starting to fill up now with the Christmas lunches, drinks as well as school nativities and, in between all of this, I need to organize my part of the Christmas shopping too – although I shouldn’t complain too much as there is a large family for my wife to contend with so I get off lightly I think!!

In the office, we are busy wrapping up (no pun intended!) our current workload in the run up to Christmas for the anticipated “shutdown” once we hit mid December… well, I say shutdown, but there will invariably be that call on the 23rd December asking for a report or some advice that can be reviewed over the Christmas period?!

Aside from that I watched the “Inside Out” programme on the BBC earlier in the week as the subject was “care fees” or more pertinently, “avoiding care fees”…

This was a headline that would grab most peoples attention and was one being used to promote the services of one company but, as the programme pointed out, aside from the costs being charged to set this up (£3,000!), by promoting the “services” offered in this way, it almost rendered them useless – falling foul of what is known as the deliberate deprivation rules.

Unfortunately, this is exactly the sort of thing that concerns me as it means people watching this sort of programme will not know who to trust or, worse still, will be even more confused by the subject… the irony being that they could end up with bad advice from someone who was just very good at marketing their product/service.

We put on seminars in order to educate people about their options when it comes to protecting assets and I tend to focus on those options once someone is in care, in other words they have gone past the point of no return as far as gifting assets away is concerned and know they are self funders so require appropriate advice on how to meet these ever increasing costs – deliberate deprivation is not even a consideration…

Of course, there are instances where action taken (prior to any care needs being required) could mean assets are not to be included in any future estate calculation by the local authority when it comes to care fees, but this should be more of a consequence of the advice rather than the reason for taking it in the first place.

An example would be gifting assets (directly or by trust) for inheritance tax purposes.

Such action could mean that the assets also fall outside the estate as far as future care fees were concerned but, the reason is to mitigate inheritance tax and not to intentionally deprive the estate for care fees purposes.

Prior to going into care, the two main rules to consider (when it comes to gifting assets) are what we refer to as:

• the six month rule and
• the predominant reason rule.

The first simply states that if you elect to gift assets up to 6 months before going into care, the local authority can automatically include those assets within any estate calculation to determine whether you should fund your own care costs.

The second says that if you give away assets, and the intention was to reduce your estate in consideration of care fees, theoretically, there is no time limit for a local authority to again include these assets within the estate calculation.

If someone is a self funder, it is important they start from the right place so seeking appropriate advice should be one of the first steps to establish their options and to then be able to consider the one most suitable/acceptable to them.

If you didn’t manage to see it, you can catch the programme on the BBC’s iplayer but it will only be around until Monday I believe? http://www.bbc.co.uk/programmes/b0071ms1

This Week …

Estate Planning

Proposed changes to the UK tax system could affect inheritance tax: http://bit.ly/v1oRdk

Long Term Care

Elderly care cut as councils divert £2bn cash to plug gaps: http://bit.ly/uEWZcl
Will an end to the fees freeze on caring for older people be enough? http://bit.ly/vAZJID
“Nonsense” for anyone to say that the UK cannot afford adult long-term social care: http://bit.ly/sZJ6Iq

Retirement

Pensioners take ‘hit’ to help economy: http://bit.ly/w4Efwf

Investments

£40 million premium bond prizes yet to be claimed: http://bit.ly/too48Y
Brits hiding £4.6 billion from their partners in secret saving stashes http://bit.ly/ug9vb5

Have a good weekend!

Regards
Kieron

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