Mrs E just moved into a Residential Care Home
Mrs E's son asked us to advise on how best to pay for his mother's care costs. Mrs E (90) and her son were worried about the potential long term costs, starting this year at £975 pw (50,700 pa).
Mrs E owned her home, valued at £725,000. She had savings and investments of £175,000. Her private and State pension income amounted to £22,000 pa. She received the lower rate Attendance Allowance (AA). So, a shortfall for the care costs of around £25,600 pa.
We pointed out that her pensions would likely rise LESS than the cost of care, so the shortfall would likely increase over the years.
We ensured she obtained the Higher Rate Attendance Allowance which secured around £1500 pa extra income, which immediately helped towards care costs.
On thorough analysis of the position and options an Immediate Care Fees Annuity (ICFA) was recommended. One payment to an insurance company of £118,000 ensured a payment, tax free, to the care home of £25,000 pa, increasing by 3% pa. So, in 2 steps (AA and ICFA) we were able to secure Mrs E's care funding, for ever, and savings would never run out and the home did not need to be sold, if they decided not to.
We considered with them, too: what if Mrs E died shortly after making the one-off payment?
We offered also a Deferred Care Fees Annuity, which would have cost, instead, £78,000 and Mrs E would have paid for care fees herself for the first 2 years. If Mrs E had died, within 2 years, then the fees would have stopped. They decided to set up the Immediate Annuity.
Mr B had not established Lasting Powers of Attorney when he had a stroke
Mr B lost Capacity to make decisions. Without a registered LPA, his daughter could not speak to the bank, the investment registrar, the pension company. Yet, he needed immediate paid-for care.
She had to apply to the Court of Protection to become his Deputy for property and financial decisions.
It took months of legalities, and this with the court treating her case with urgency. (And that was pre Lockdown. Post Lockdown the courts are swamped.) The sheer amount of work she had to perform - in entirely new and complicated areas - was enormous. Also, it cost many thousands of pounds. Until she obtained Deputyship, she spent her own family's money paying for her father's care.
Setting up LPAs for Financial & Property affairs and Health, Care & Welfare, when all is well and stable, will save a lot of future costs and problems.