Care home fees are eroding estates much faster than any inheritance tax will according to one estate planner.
The relief available to people looking to fund long term care for the infirm or elderly as much smaller with costs coming in at a much lower level of savings when compared to inheritance tax or even probate fees.
Simon Mansell, a law graduate and founder of Temple Bar Independent Financial Advice says solicitors and will writers both have a duty to skip legal commentaries and go directly to case law at every opportunity to ensure they’re up to date .
Speaking to Today’s Wills and Probate, Simon said: “The inheritance tax threshold is now 650,000 and it’s soon to be increased. As far as this goes outside of London, it’s a different world which thinks differently, so now most of us involved in planning and are dealing with estates just aren’t impacted by this.
“However, long term care assessment, the nil rate band is not £325,000 or £650,000 or anything like that, it’s just £23,250. One in four will go into care and for the majority of the UK populous, care fees will erode their estate far more effectively than inheritance tax ever could. Inheritance tax was always a low income producer as far as government were concerned, that’s why they didn’t mind putting the threshold higher.
“Paying for care is a problem for most people, especially with an ageing population. There are no real solutions out there and the care cap is having very little effect until something like £150,000 or £160,000 worth of fees have been paid.
Simon also believes those involved in the profession have a duty to go back to case law to ensure they’re well equipped to plan for their clients.
He continued: “Nil rate band planning is right now of no relevance for inheritance planning, and planning to reduce IHT is a problem of the wealthier.
“If professionals don’t go to the source they are perhaps doing a disservice to their clients. One great problem from a regulatory point of view from my position is that the Financial Conduct Authority have a different view on long term care planning – they see long term planning as long term funding, which is treated differently.
“Whereas an estate planner, who is unregulated, they’re not restricted by that vier and can openly discuss tax minimisation as a legitimate aim.
“The problem is, conventional wisdom has blurred boundaries to some extent, they assume any action taken will be deliberate deprivation. There is misinformation that is promoted by various bodies, but there is also a lot of misunderstanding generally as well.
“My advice to any estate planner is to stop reading commentary and go back to sources, the case law and see what judges have said, for example in Beeson, R v Dorset County Council.
“If you take authority from any third party you’re in danger of it being diluted so actions can be taken as long as care isn’t on the immediate horizon.”
Simon Mansell is director at Temple Bar Independent Financial Advice Ltd
