When you think about the next phase of your life, focusing on the experiences you want to enjoy is easy.
For instance, you might imagine yourself travelling the world, picking up a new hobby or two, or simply spending more time with your loved ones.
However, as you plan and save for these goals, it’s just as important to consider how you’ll manage potential later-life care needs.
A survey reported by IFA Magazine revealed that 45% of UK adults believe government funding for later-life care will decline, yet only 8% are seeking financial advice on the issue.
This shows that, while many people do recognise the growing costs of care, far fewer are preparing for them.
If you want to take a proactive approach to funding care, you’ll find a considerable amount of information online.
Some of it is accurate, some misleading, and some might not necessarily apply to your unique circumstances.
To help you separate fact from fiction, continue reading to discover five later-life care myths that could derail your planning efforts.
1. “The NHS will always offer free later-life social care”
While you may expect the NHS to cover your care needs, this isn’t always the case. It does fund certain types of medical treatment, but social care is typically means-tested.
If you require help with day-to-day life, your local council will first carry out a care needs assessment to determine the type of support you require.
They will then conduct a financial assessment – referred to as a “means test” – to evaluate your income, savings, and property wealth. This dictates how much you will need to contribute to your care costs.
You will typically need to fund your own care if your assets exceed the “upper capital limit”, which stands at £23,250 as of 2025/26.
Meanwhile, if your assets are below £14,250, known as the “lower capital limit”, you will only contribute what you can afford from your income, while your savings and capital are usually ignored entirely.
If the value of your assets lies between these limits, you will typically pay what you can afford, plus a means-tested portion of your assets.
Assuming that all care is free at the point of use could lead to a significant shortfall in your planning efforts.
Indeed, you might not set aside enough funds to cover potential care costs, meaning you inadvertently exhaust the inheritance you intended to leave for your loved ones.
2. “I can give away my property to avoid having to pay for care”
Transferring assets to your family or friends to avoid care fees might seem like a clever strategy, but in reality, it can come at a cost.
Indeed, there are strict rules to prevent what’s known as “deliberate deprivation of assets”.
This refers to the situation where you intentionally reduce the value of your assets, perhaps by gifting your home or large sums of money, so you appear to have less wealth when you undergo a means test.
If your local council believes you have done this deliberately to avoid care costs, they can treat these assets as if you still own them.
This means the value could be included in your financial assessment, and you may be required to pay for care as though you hadn’t given anything away.
Even if the transfer occurred years before you require care, there’s typically no fixed time limit to how far back the council can look.
As such, it’s important to demonstrate that avoiding care home fees was not your intent, as councils can apply the deprivation rules if they believe this was your motivation.
It might be worth seeking professional advice before you make large gifts or transfer ownership of your home.
That way, you can ensure that any decisions align with both strict funding rules and your long-term goals.
3. “My spouse or children can automatically make decisions for me if I can’t”
You might assume that if you move into care due to a loss of capacity, your spouse or adult children can simply step in to help.
However, this isn’t automatically the case. Without the proper protections in place, even your close family members might be unable to access your accounts, pay bills, or make important health decisions on your behalf.
To avoid this, it’s vital to nominate a Lasting Power of Attorney (LPA).
Simply put, an LPA is a legal document that allows you to appoint someone you trust to make decisions on your behalf should you lose the ability to do so yourself. This person is known as your “attorney”, and you can appoint more than one.
There are two main types of LPA in England and Wales:
- Health and welfare – Your attorney can make decisions regarding your daily routine, medical care, whether you move into a care home, and any life-sustaining treatment.
- Property and financial affairs – Your attorney can manage your bank accounts, pay bills, collect your pension, and even sell your home.
Acting early is vital, as you must have full mental capacity when creating an LPA. However, once registered, it can take effect when you need it, either temporarily or permanently.
It’s worth noting that a property and financial affairs LPA can come into effect straight away if you wish, while a health and welfare LPA does not take effect until you lose capacity.
4. “I won’t be able to benefit from the residence nil-rate band if I don’t live in my home”
Another common myth involves Inheritance Tax (IHT) and the residence nil-rate band.
As of 2025/26, the standard nil-rate band stands at £325,000. On top of this, you can benefit from an additional £175,000 residence nil-rate band, provided you leave your main home to a direct lineal descendant.
Combined, these allowances can raise your total tax-free threshold to £500,000.
You might worry that moving into a care home or selling a property will prevent your estate from benefiting from the residence nil-rate band.
However, this isn’t always true. So long as your property was your residence at some point, it can still qualify for the allowance, even if you no longer live there when you pass away.
This flexibility can help ensure your loved ones aren’t left with an unnecessarily large IHT bill.
5. “If I pass away in care, everything will automatically pass to my spouse”
It’s easy to assume that your estate will automatically transfer to your spouse if you pass away in care.
Passing away without a valid and up-to-date will typically means that the government decides who receives your assets under the rules of intestacy.
These laws could divide your estate against your wishes. While this might work for some people, you may want to have a say in something as important as the division of your estate.
As such, it’s vital to ensure your will is current long before you enter care. You may even want to spend time updating it once a year to check whether it still accurately reflects your circumstances.
Get in touch
We can help you plan for potential future care costs so you can focus on saving towards your dream lifestyle in retirement.
Please email us at info@investmentsense.co.uk or call 0115 933 8433 to find out more.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning, tax planning, Lasting Powers of Attorney, or will writing.
