Thackray Williams

You could be mistaken for thinking that this term defines the category of people who adore various fillings in between slices of bread. However, it is in fact an expression that has officially been added to the Merriam-Webster dictionary, describing the generation of people who care for their parents while also supporting their own children.  Less interesting you may think, but if you do fit into this category the information below may be worth digesting.

Elderly people have increasingly longer life spans yet their assets have shrunk and the cost of care and nursing home fees continue to rise and young people are facing higher tuition fees and an extremely competitive employment market. These factors may leave you in the difficult position of trying to support yourself, your children, and your parents at the same time.

A recent report by Lloyds Banking Group reveals a 7.6% increase in these family set ups since 2005, now standing at 500,000 households.  The recession is a contributory factor but the numbers of elderly people are also increasing. The government have predicted that by 2026 there will be an estimated 2.6 million people aged over 85- double today’s figures- and the number of people over 100 will have quadrupled. This is inevitably going to have an impact on the finances of both the elderly and the sandwich generation, as both pull together to support each other and finance increasing care costs over longer periods. 

The Government recently published a green paper on long-term care, setting out proposals to tackle this financial burden. Under the current rules, people with assets including property in excess of £23,000 have to fund their own care.  In the South East these easily amount to more than £50,000 annually.  The result is that more people are forced to sell their homes, considerably reducing their estates which they may wish to pass to their families following their death.

The green paper proposes the introduction of a compulsory £20,000 insurance, which would cover care costs for your lifetime, to be paid either on retirement or from your estate following your death.  However, this would not cover the cost of food or accommodation, and may still result in the enforced sale of property to fund these excluded costs which may be payable for an indeterminable period.

There are some benefits that can assist the ‘Sandwich Generation’.  You can claim a carer’s allowance (£53.10 per week) if an elderly parent moves in and you weekly provide more than 35 hours care, and you earn less than £95. Also, if you need to make adjustments to your home to accommodate long-term care then there is a disability band allowance reducing council tax payable on your property by one band.

There are also steps that can be taken to try and protect the property from sale.  If elderly parents include a discretionary trust in their wills rather than passing it to the survivor outright, this can protect at least half of the property from being taken into account in assessing care contributions, and it can be argued that the property should not be sold at all as half is owned by the trust. However, a maximum of £325,000 can be placed in the trust without attracting Inheritance Tax, and you have to show that the intention is not purely to avoid care fees. Extreme care should also be taken if consideration is being given to gifting the property outright or placing it into trust during your lifetime. This can lead to Capital Gains Tax, Inheritance Tax and Income Tax implications and it is therefore important that advice is taken from an expert.

For more information contact Anthony Macey on 020 8663 0503 or email: anthony.macey@thackraywilliams.com