TAX AND LEGAL MATTERS
"Will my move into care affect other aspects of my life, such as my will or tax?"
One of the things that makes us different is our insistence on looking at your entire financial, legal and taxation situation.
Many people don't realise it, but a Will that was previously suitable may be inappropriate once you are paying for care care. This could be a result of the way in which the estate is split, it could be particular gifts that have been made, or in the case of married couples, gifts between spouses that could be highly inefficient for care funding.
We are not legal advisers so will review your Will from a care funding perspective only and recommend you speak to your solicitor, or refer you to a trusted legal adviser, if further work appears to be needed.
POWER OF ATTORNEY
As we get older, we sometimes need help with things that we once managed easily.
A Lasting Power of Attorney (LPA) allows you to appoint people that you trust to help you manage your affairs. Initially this might just be help with banking or making decisions on finance or the care you might need.
Later on, if you were to lose your ability to make your own decisions, your attorney could take over the running of all of your affairs.
Many people trust their children, other family members or close friends to do this for them. Sometimes it may be appropriate to appoint a professional power of attorney, such as a solicitor.
There are two types of LPA, one that covers your 'Property & Affairs' and the other your 'Health & Welfare'.
An LPA is a very powerful document. Your Property & Affairs attorney can access your bank account, pay bills, buy investments or even sell your house. Your Health & Welfare attorney can chose the care that you receive and even accept or decline medical treatment on your behalf.
It is wise to arrange your LPA before you actually need it; a little like having an insurance for the future.
If you have not appointed an attorney and, as a result of accident, dementia or other illness, you cease to be able to make decisions for yourself, someone (usually a family member or legal professional) can apply to the Court of Protection to act as your Deputy. This is a lengthy and often expensive process and the Court will continually supervise the Deputy and the decisions they make.
We can refer you to a solicitor on either of these matters for further help and advice.
Moving into care will usually mean that you pay more tax than you did previously. This is because you may have to sell your main home, which was tax free whilst your main residence, in order that you can meet the cost of your care. It is important, therefore, that your taxation position is reviewed and managed to make sure that your assets are as tax efficient as possible, within the boundaries of your care and financial requirements.
We can also help you to plan for Inheritance Tax as well, if appropriate. We have a number of tax planning solutions available.
INHERITANCE TAX (IHT)
Inheritance Tax is a complex tax which is charged at three possible rates; 0% on estates up to £325,000 and 40% on assets over that amount. This can reduce to 36% if you gift 10% or more of your estate to charity.
There are a number of reliefs and exemptions available to reduce the amount of IHT to which your estate might be liable, such as the spouses nil rate band transfer and the £175,000 Residence Nil Rate Band.
In addition you can give money away, although in most cases it will take seven years before it completely leaves your estate. Gifting money could impact on future State Benefits too.
Alternatively there are certain investments that can qualify for an IHT exemption after only two years.
We always review the IHT position of our clients and use the strategies available to reduce the impact of this tax where possible.