Funding later-life care: Challenges and advice for farming families

Isabel Davies 17 July 2024

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Farming families may have done some estate planning for what happens when a family member dies, but the financial impact of a need for long-term care in old age can be huge.

A live-in carer can cost up to £2,500/week, while it is not uncommon to see the weekly charge for residential care at £2,000, with the cost higher for nursing homes.

The reality is that while many families may wish to take care of their loved ones themselves, this is not always practical or appropriate, particularly where the care needs are complex.

Given the cost of full-time care is likely to be far higher than the income from the vast majority of pensions, there are difficult questions as to how it can be funded.

How much does care cost?

The price of home care varies across the UK, but typically costs £23-£34/hour
Live-in care fees start at about £900-£1,400/week, but can be as much as £2,000-£2,500/week
The monthly average cost of residential care is £4,640, while nursing care in a care home costs on average £5,640/month

Source: Homecare.co.uk and Carehome.co.uk

Hannah Lloyd, a solicitor with Wright Hassall, says it is an issue that has probably not been given enough airtime in many farming families, with the focus of estate planning tending to be on death planning, in particular whether assets will be eligible for reliefs from inheritance tax.

“There has been less of a focus on the issue of diminishing capacity and care needs. Farmers are quite used to talking about death, but the idea of needing care is not something that people want to think about.”

Even where families have put in place some sort of plan, they can get caught out by the length of time for which they find themselves needing to pay for care, warns Hannah.

Plans may have been put in place 20-30 years ago when care homes tended to just be for end-of-life care.

However, increases in life expectancy mean that growing numbers of people are reaching a very old age and requiring care for much longer periods.

“I worked with a family where there was actually substantial planning in place for such an eventuality, but a treasured senior member of the family has now spent seven years in residential care.

Funding that is a constant worry and planning for the future of the next generations is extremely challenging.”

It is a significant problem for anyone, but Lauren Godfrey of Buckles Solicitors points out that for farmers it is particularly complicated with their business and home lives often being intertwined, and usually other family members with interests in the business.

Selling assets to fund care has the potential to have an impact on more than one family and can undermine the future viability of the farming business.

Top tips

Written partnership agreements should be in place and regularly reviewed to see if they need updating to ensure they stay relevant. Their content should also dovetail with what is set out in any wills. It is also vital that all family members understand the nature of these agreements and what they mean.
Make sure any interests in property and land are accurately recorded, so everyone understands who owns what assets and whether there are any claims over them.
Ensure that an up-to-date will and lasting power of attorney are in place and consideration is given to any conflicts of interest – for example, where someone with power of attorney is also a partner in the business. As an attorney, their responsibility is to act in the best interests of the person they are acting for (the donor), but as a partner it may not be in their interests to sell partnership assets to pay for care.
Seek advice early

Estate planning should not just be something done once and then the plan put on a shelf, but regularly revisited, stresses solicitor Hannah Lloyd of Wright Hassall.

While it is not something that people like doing, in a world where farmers are facing huge amounts of uncertainty, it is a way to create a degree of certainty.

The conversation tends to start with getting wills and lasting powers of attorney in place.

This can then be used as a springboard into wider conversations about tax planning, business structures and whether there is scope to invest money outside of the business, so it is available in the event of needing care.

The earlier these discussions start, the better, and it is also crucial that they involve everyone affected, not just the upper generation.

“The easiest families to deal with are the ones where there are lots of open conversations through the generations. Even if there are squabbles, it means their issues are aired and there are fewer surprises.”

Complex financial support system

The financial support system for anyone needing care services is complicated and depends on a person’s assets, their location and their specific care needs.

“The NHS was designed to offer healthcare, free to everyone at the point of need, irrespective of their financial means and resources ‘from cradle to grave’,” explains Lauren.

“In contrast, social care needs are met by the local authority and are not free.

“It is means-tested and as most farmers will have assets above the local authority funding threshold of £23,250 [in England], they will have to pay for the full cost of their care with no help from the local authority.”

The previous government had announced that from October 2025 the intention was to raise the threshold to £100,000.

Financial assessment

One of the first steps for anyone with a family member needing care is to ask the local authority for a needs and financial assessment.

The financial assessment will look at an individual’s savings, property, benefits, pensions and any other sources of income to establish how much they will need to contribute towards their care.

Even when the assumption is that the individual will be self-funding their care, a “light-touch” assessment is a useful starting point to identify how different assets might be regarded by the local authority.

Assets

Ultimately, local authorities have a duty to ensure that individuals are paying for care where they have personal assets over the financial threshold.

There are some assets that can be temporarily disregarded – for example, the individual’s interest in their home if their spouse or civil partner, and in some circumstances other relatives, still live in it.

But other assets will not be automatically disregarded, even if they are jointly owned.

This makes it important to understand how assets are held within a farming partnership and what the care user’s share of those assets might be – something that is not always adequately documented.

There are often assets where it is not immediately clear as to the extent of the share or where there may be parties with a beneficial interest even if they don’t have legal ownership, says Lauren.

Identifying the ownership of assets commonly causes problems in estate planning and farm business restructuring, so it is an area well worth addressing in any case.

Specialist professional help from your solicitor, accountant and any financial and business advisers will be invaluable at this point to work out the best way forward on the care front.

They can establish what assets will be counted towards the financial calculations for care funding and make sure the local authority is applying the rules correctly.

Assets that belong to a partnership will be excluded from the financial assessment.

There are also shares in farming partnerships that can be particularly challenging to sell and would have a limited value on the open market.

However, land that is either personally or jointly owned – for example, by a husband and wife – would generally be viewed as an asset that can be realised relatively quickly.

People sometimes mistakenly assume that if it is a business asset then the local authority will disregard it, says Hannah.

“They do have a discretion to disregard it, but not an obligation to, and their duty is to ensure that assets aren’t maintained at the expense of the public purse.

“So, what is more likely to be the case is to use their discretion to disregard it for a ‘reasonable’ period of time, until that asset can be realised.”

A further complication is the fact that local authorities can take different approaches, so agreeing what assets should be considered and their likely value tends to come down to a negotiation.

Transferring assets

Attempting to circumvent care fee contributions by transferring assets to partners or other beneficiaries can trigger “deprivation of asset” rules, warns Lauren.

Under these rules, any assets transferred under the guise of reducing accessible wealth to avoid paying care fees could be included back into the financial assessment for care contributions.

Some people believe there is either a six-month or seven-year rule for transferring assets, meaning that if you give them away before care is needed then they will not be taken into consideration.

But this is not the case, and technically local authorities can go back as far as they want if they suspect that deprivation of assets to avoid paying for care has been the motivation for transferring assets.

However, there are legitimate steps that can be taken as part of wider succession planning which would put farming families in a more favourable position in terms of protecting assets.

This might involve passing assets down the generations sooner or considering different business structures such as trusts or companies.

“If mum and dad are already in their 80s and 90s then there is not a great deal you can do, as that would be in deprivation of assets territory,” says Hannah.

“By the time you are looking at it for that generation, you should be using it as a trigger for making sure the affairs are in order for the next generation down. A lot can be achieved with careful planning.”

Devolved differences

The amount of savings that people can have before needing to pay for residential care differs in each of the devolved regions.

The upper limit for capital in Scotland is £35,000, compared to £50,000 in Wales and £23,250 in Northern Ireland.

There are also important differences in the systems. For example, in Scotland, individuals may be eligible for free personal care or nursing care. However, if they need residential care then they will still need to pay for the accommodation element of this.

In Wales, there is currently a £100/week cap on the contribution an individual has to make to the cost of care at home.

Financial planning and care annuities

Andy Page is a chartered financial planner and accredited member of Society of Later Life Advisers with accountant Old Mill.

He says that as part of succession planning he also encourages farmers to think about whether there is capacity to invest some money outside of the farming business.

If they have money in the bank, pensions and other investments, then there is something to draw on before needing to resort to selling assets needed by the business.

“Of course, it is only possible to squirrel money away if you have some spare, and I’m aware that is getting harder to do.

“But it is about planning for the future, as just because your wealth is tied up in a business doesn’t mean it protects you from having to pay for care.”

As a financial planner, Andy helps families look at the assets the person needing care has and works out how long the money will last under various scenarios.

“At the point someone needs care, you need professional advice to look at all the possibilities and understand the implications for the wider family.

Starting point

“The starting point is always to understand what they have got – which can be a bit of a challenge in rural businesses in terms of understanding who owns what.

“It’s about establishing what they have that can be used to bridge the gap between what is coming in in terms of income and what you need to be paying out in care costs – whether that is for domiciliary care or a move to a care home.”

There is no right or wrong answer about what you do from this point, but it is important to be able to make an informed decision, says Andy.

Some may decide to spend any money sitting in the bank over time and so he will do cashflow forecasting to work out how long that will last.

“This will be based on assumptions about care fee inflation, which tends to be higher than general inflation, so over time the gap between income and expenditure grows, which has an impact on how quickly money runs out.”

Investing money

Alternatively, people can choose to invest money with the hope it earns a better rate of return than leaving it in the bank – with the downside being that it might fall in value.

A third option is a care fees annuity, which is where specialist insurance companies offer a guaranteed annual income to help pay for care in return for a one-off lump sum.

The amount needed to buy the annuity will depend on the individual’s health conditions and prognosis.

This can provide peace of mind, as it should cover the fees for the rest of the person’s life, effectively capping how much will need to be spent.

“The flip side is if the person dies in the early months, then that is a payment which is gone. So financially you may lose out unless you build in capital protection, which would mean some capital is returned on a reducing basis.”

Sometimes a care annuity is a viable option, but the premium can be very high when an individual is expected to live a relatively long period of time, he says.

Before taking out an annuity, also consider that care needs might rise over time, so costs could rise.

Andy says the cost can vary significantly because it is based on each individual’s health assessment, but they typically return 20-35% of the lump sum as income on an annual basis.

NHS England may meet full cost of care in limited cases

The NHS in England will meet the full cost of a care home, in certain circumstances, through Continuing Healthcare Funding (NHS CHC).

This is for people who are assessed as having a “primary health need”, says Lauren Godfrey of Buckles Solicitors.

Crucially, eligibility for NHS CHC is not means-tested and depends on the patient’s assessed needs, rather than any particular diagnosis or condition.

“But accessing this funding can be somewhat of a postcode lottery. Unfortunately, it is not available to all, and many are wrongfully denied funding,” says Lauren.

Between 1 January and 31 March 2024, only about a fifth of people who were assessed for standard NHS CHC were found eligible, although there was a wide variation between different regions.

Given the high costs of care, family members usually want to make sure they exhaust all avenues in terms of accessing any funding the care user may be entitled to.

However, there is a complex two-step process involved in securing this funding.

The first stage is a screening checklist that evaluates a patient’s wellbeing across 12 areas, with healthcare professionals assigning scores based on the patient’s needs.

Depending on the outcome, a multidisciplinary team is then asked to carry out a full assessment using a decision support tool to consider the needs in more detail.

This will help to establish how complex, intense and unpredictable the needs are and whether they pass the “primary health needs” test.

“It is a bit of a grey area in terms of at which point you become eligible, so we do find ourselves attending reviews as an advocate or assisting with challenging eligibility decisions, while also advising on retrospective claims after a person’s death,” says Lauren.

It is an evidence-based process, so one thing family members can do to help bolster their application is to gather as much information as possible to support the case, including copies of the patient’s medical records and details of their daily care needs.

Attendance allowance

Attendance allowance is available across the UK to people over state pension age to help pay for personal care.

It is payable at either £72.65/week (lower rate) or £108.55/week (higher rate) and can be spent however you like.

The amount you get will depend on how much help you need.

You do not have to have someone caring for you in order to claim. It can be spent on equipment to help carry out tasks or to pay for someone to clean or shop, for example.

It is possible to apply for attendance allowance on behalf of someone else – for example, a parent or other relative.

This allowance is not means-tested, so is unaffected by income or savings, and it is not solely for people with a physical disability or illness.

It can also be claimed if someone needs help or supervision throughout the day or night because of a mental health condition, learning difficulties or a sensory condition, such as being deaf or blind.

There is a six-month rule that means you must have had care or supervision needs for at least six months before you can get attendance allowance.

Minor home adaptations

Most people want to stay in their own home for as long as possible and there can be financial support available from local councils in England to help install equipment that will make life easier.

A council social care professional can visit to assess the individual’s needs and advise on home adaptations that would make things easier.

If the recommendations – such as installing grab rails or outside lights – cost £1,000 or less then in some circumstances they may be provided and fitted free of charge.

Similar help is available in Wales, funded by local authority and other grants and delivered by charity Care & Repair Cymru.

In Scotland, local authority grants of 80-100% can fund repairs, improvements and adaptations.

Across England, Northern Ireland and Wales, local authority grants can help with the cost of adapting a property for the needs of a disabled person.

Help for tenants and others who have to leave their home

Farmers who have to leave their farm because of ill health or retirement but are struggling to afford to buy somewhere else to live locally, can apply for help through the Addington Fund’s Retirement Housing Scheme.

This scheme sees the Addington Fund purchase a property specifically for the successful applicant(s) to live in during their retirement, which they rent for 20% less than the open market rate.

If they have savings, this can be put towards the purchase under a shared equity arrangement.

Sue English, director of the Addington Fund, says the scheme is particularly suitable for tenant farmers who face the prospect of losing their home, as well as their farm, by relinquishing their tenancy and do not have enough capital to buy a home.

“Often the options open to them are not particularly welcoming. So we support them by buying a property to rent out to them, in an area they wish to live.”

The scheme is designed for people who can still live independently.

Once an application has been approved, the applicant is set a budget and initially left to identify a suitable property in their chosen location.

Assuming this fits the Addington Fund’s criteria, it will then purchase the property on their behalf. The charity currently owns 64 such properties.

For more details, visit the Addington Fund website or telephone 01926 620 135.

Advice and support

The Royal Agricultural Benevolent Institution’s (Rabi’s) regionally based support managers work in collaboration with other voluntary, professional and statutory services to form comprehensive wrap-around support for elderly and retired farmers.

This includes helping to access financial grants to aid independent living, through to representing an individual with the Department for Work and Pensions.

Farming people of any age can access Rabi’s support and expert advice and guidance by calling its 24/7 helpline on 0800 188 4444.

Age UK has useful factsheets explaining different options for paying for permanent residential care.

Get in touch on care issues

Have you and your family found a solution to a care issue?

If you think this might help other readers, please get in touch with suzie.horne@markallengroup.com