Protecting your cash from care fees

It is a little-known fact that many couples in their 60s would benefit from splitting their assets and investments 50/50 and holding them in separate accounts in case either of them ever needs long-term care.

Why? Because a person must fund their own care until their assets are down to the last £14,250, when the local authority will foot the bill. All their income will also be used, except for £22 a week spending money.

But local authorities have no right of access to financial information on the partner or spouse and cannot touch their assets.

If savings are split evenly in separate accounts, only half the couple’s money will be swallowed up in funding long-term care fees. The partner or spouse’s assets are fully protected (and they still have the option of paying a top-up to the care provider for better care and accommodation than the local authority is prepared to pay for.)

I meet an awful lot of clients who put the bulk of their savings into the wife’s name simply because she is a non-taxpayer. In ordinary circumstances this is a sound idea, but if the wife falls ill and care funds are needed it could prove costly.

Couples should also beware of putting all or most of their savings into one institution. One couple I visited recently had everything with the Halifax, albeit in different accounts.

The problem is that they only get Government protection in case the institution goes bust up to a maximum of £85,000 per person per institution – and in the case of the Halifax, the one ‘institution’ also includes Lloyds/TSB, Bank of Scotland, Cheltenham & Gloucester and Birmingham Midshires!

An independent financial adviser should be able to suggest ways to help.