How Will Paying for Long-Term Care Impact My Inheritance Plan?

As we get older, planning for the future becomes about more than just enjoying retirement. For many, it also includes thinking about how to pass on wealth to loved ones. But what happens when long-term care is needed - and how could this affect your inheritance plans?

In this blog, we explore how care costs could reduce the value of your estate, the options available to help you plan, and why taking early advice is key.

The Cost of Long-Term Care in the UK

Long-term care - whether at home or in a residential setting - can be expensive. Depending on your needs, care home fees can easily exceed £50,000 a year, particularly if nursing care is required.

Unlike medical treatment, social care is not free at the point of use. You may have to pay for some or all of your care depending on your savings, property value, and income. If your assets are above the current threshold set by your local authority (for example, £23,250 in England), you may not qualify for financial help.

This means that care costs are often funded from personal assets — including pensions, savings, and in some cases, the family home. The longer care is needed, the more it can eat into the value of your estate.

How Inheritance Plans Can Be Affected

You may have already set out a plan to leave money, property or other assets to your children or grandchildren. But funding care could require selling assets or using savings that were originally intended to be passed on.

This can be particularly challenging if:

• Your main asset is your home.

• You require full-time care over several years.

• You have not made a formal financial plan for care.

Without proper planning, your estate could be significantly reduced, meaning less to leave behind.

Can I Protect My Assets from Care Fees?

There are options that may help, but it’s important to know that you cannot simply give away money or property to avoid paying for care. Local authorities have the power to investigate deliberate deprivation of assets, which is when someone intentionally reduces their wealth to qualify for support.

That said, there are legitimate ways to plan ahead:

1. Gifting and early inheritance
You may choose to gift some of your assets during your lifetime. This allows you to see your loved ones benefit and may reduce the size of your estate for inheritance tax purposes. However, timing is key, and professional advice is recommended.

2. Setting up a trust
Trusts can help protect certain assets, but they must be created carefully and for the right reasons. Not all trusts will shield assets from care assessments.

3. Equity release
Some people use the value in their home to fund care, via products like lifetime mortgages. This can provide access to funds without needing to sell the property, but will reduce the amount left to beneficiaries. Not all Lifetime Mortgages will allow you to do this and you should speak to a Lifetime Mortgage Adviser first if you are considering this.

4. Long-term care plans
Specialist insurance products may help cover care costs in return for a lump sum or regular payments. These plans are not suitable for everyone and should be discussed with an adviser.

Start the Conversation Early

The sooner you start thinking about care, the more options you’ll have. Planning ahead means you can:

• Understand how care funding works.

• Consider the impact on your estate.

• Build care costs into your retirement and estate planning.

• Discuss your wishes with family.

It can feel overwhelming, but a conversation with a financial adviser can help you take control of your plan and feel more confident about the future.

Final Thoughts

Long-term care is a sensitive but essential part of financial planning. The sooner you start thinking about how care might impact your future, the more options you’ll have to shape the outcome. With the right strategy, it’s possible to balance funding care with protecting your inheritance goals.

A pension is a long-term investment.  The fund value may fluctuate and can go down.  Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation. 

Inheritance tax planning and Trusts are not regulated by the Financial Conduct Authority.

Approved by InPartnership FRN 192638 August 2025