The financial world is notorious for jargon; this glossary intends to bring clarity to the world of later-life financial planning.
Care Home
A residential setting that provides personal care such as washing, dressing and help with daily activities. Care homes do not provide 24‑hour nursing care.
Nursing Home
A care home that also provides 24‑hour nursing care by qualified nurses. Nursing homes are usually more expensive than care homes.
Eligible Care Needs
You must have “eligible care needs” before a local authority will contribute towards care costs. This is based on a formal assessment and relates to your ability to carry out certain activities of daily living and the impact on your wellbeing.
Activities of Daily Living
These are everyday tasks such as washing, dressing, eating, using the toilet, and staying safe at home. Difficulty with these activities is central to assessing care needs.
Means‑Testing
The process by which a local authority assesses your income and assets to determine whether you must pay for your care and, if so, how much.
Capital
For care fees purposes, capital generally includes savings, investments, and property, subject to certain rules and disregards. Different rules apply to income and capital.
Upper and Lower Capital Thresholds
These are the financial limits used in care means‑testing:
- Below the lower threshold, capital is ignored
- Above the upper threshold, you are classed as a self‑funder
- Between the two, a “tariff income” is assumed
Self‑Funder
Someone who is responsible for paying the full cost of their care because their assets exceed the upper capital threshold.
Tariff Income
A notional income assumed from capital held between the upper and lower thresholds. This income is calculated regardless of the actual return earned on the money.
Principal Private Residence
Your main home. Its value may be disregarded for care means‑testing in certain circumstances, but this protection is not automatic or permanent.
12‑Week Property Disregard
For the first 12 weeks after permanent entry into a care home, the value of your main home is ignored during the financial assessment.
Deferred Payment Scheme
A scheme run by local authorities allowing care fees to be effectively loaned against the value of your home. The amount owed is recovered when the property is sold or from the estate after death.
NHS Continuing Healthcare (CHC)
A package of care funded entirely by the NHS for people with severe health needs. It is not means‑tested but is difficult to qualify for and subject to a formal assessment process.
NHS Funded Nursing Care
A weekly contribution from the NHS towards the nursing element of care in a nursing home. It is paid directly to the care provider, not to the individual.
Attendance Allowance
A non‑means‑tested benefit for people over State Pension age who need help with personal care or supervision. It is one of the most underclaimed benefits in the UK.
Deliberate Deprivation of Assets
Actions taken to reduce your assets in order to obtain help with care costs when the need for care was foreseeable. This can include gifts, sales at undervalue, or converting assets into exempt forms.
Qualifying Relative
Certain relatives whose occupation of your home may allow it to be disregarded for care means‑testing purposes. The rules are detailed and age‑specific.
Immediate Needs Plan
A specialist form of annuity designed to pay care fees for life in exchange for a lump sum. It is typically considered at the point care is required.
Life Interest Trust
A trust often created through a Will that allows one person to benefit from an asset (such as living in a property) during their lifetime, with the asset ultimately passing to others.
Asset Protection Trust
A term often used commercially rather than legally. These arrangements are frequently misunderstood and can create tax and care‑fees issues if used incorrectly.
Let’s talk about later life planning
If you’re facing decisions about later life planning for yourself or a family member, I’m happy to help you understand the position and your options. You’re welcome to contact me by phone, WhatsApp, email, or through the online enquiry form.
Your initial consultation is at your convenience, at my expense, and without obligation.