When someone needs long term care their family is likely to have a thousand questions, not only about the actual care needed, but about money, care fees, care funding – and how to figure it all out. Financial tips about going into care can be invaluable.
Our article today is from Phil Hassell, Director and Financial Planner at Mike Robertson Associates Ltd in East Sussex. Phil shares his 5 financial tips about going into care here – and uses a case study to illustrate why they’re important.
Family case study – paying for care
Mike Robertson Associates aims to help clients make their money work harder, regardless of what stage of life the client is at, and whatever the client’s situation. In this article Phil highlights a case study in which a family needed to arrange care for their father, and yet they were concerned about various financial issues and what they should do in different scenarios.
Let me share a story with you that seems to be common amongst families dealing with a relative in long term care.
A much loved father had been in care for 6-8 months after being discharged from hospital. On various visits from the children they were not happy with the care he was receiving. It was so bad that they got him moved to another care home upon which his overall demeanour improved dramatically.
The move meant that there would be an increase in the care fees to around £4,000pcm, and this was a huge worry to the children, as they were concerned about how long the money would last. However, they felt that their father was now getting the care he deserved.
Fully funded NHS Continuing Care
After having an initial meeting with them and going through their father’s financial position I asked if he had had a full health needs assessment done on discharge from hospital, to look at eligibility for funding. “What’s that?” was the reply. “No one mentioned it at the time.” Sound familiar?
Having put the children in touch with Angela Sherman at Care To Be Different, the following 6 months was spent getting the father’s health needs properly assessed and applying for NHS Continuing Healthcare funding. The outcome was me receiving a phone call from the children saying that their father had been assessed and not only did he meet the criteria to receive Continuing Healthcare funding, but he would also receive a refund of all care fees paid to date. What a great result.
Receiving Continuing Healthcare funding can lead to different financial concerns
However, the children now found themselves in a situation where they were now worrying about money for completely different reasons than before!
The father’s assets had not changed. He had:
- Cash in the bank
- Investment Bonds – with income being drawn
- Property – that had been rented out
- Inheritance – due from his wife, who had just died
The most important thing for the family was that their father continued to receive the best possible care, but now that the care fees would be paid by NHS, the worry was more on how to manage the assets for the future and deal with the potential tax liabilities associated with this.
Questions about care funding and protecting assets
From worrying about how long the assets were going to last, the children were now asking questions such as the following:
- We have Power of Attorney but what does this allow us to do, bearing in mind our father still has mental capacity?
- How can we reduce the potential Inheritance Tax bill that will increase over time as the estate value increases?
- What are the tax implications for keeping or selling the property?
- How do we deal with the inheritance that is not required by father?
- How do we manage the investments in most tax efficient manner?
- How can we reduce father’s income tax liability?
- What happens if NHS funding ceases in the future?
5 financial tips about going into care
The questions above are the sorts of things many families ask – and should be asking – in this kind of situation. Each case is different, but there are 5 financial tips about going into care that are relevant into most scenarios:
- First and foremost seek appropriate professional advice – and make sure professional you consult is well-versed in care matters, including state funding. There are a lot of myths about care fees, so make sure you’re getting accurate advice.
- Get a full assessment of both the health and financial position of your relative, including their current and future tax position. There are a number of different scenarios to consider.
- The care of your relative comes first – but it’s also important to prioritise what is important to the family, e.g. protection of assets from long term care costs or protecting against inheritance tax.
- If trusts are involved or are being considered, be sure to establish the impact on long term care costs and on inheritance tax.
- Never give up asking questions – and never assume your question is too trivial to ask. The chances are, it’s a question many other people are asking, too.
Going back to our specific case study, the most important thing at the centre of the advice we gave this family was to ensure the ongoing good care of the father and to make sure all assets would be kept in his name. Using our knowledge and expertise at MRA Ltd we were able to answer all the children’s questions and lay out a strategy for them that addressed all their concerns and gave them the peace of mind that they were acting in the best way for their father.
If you find yourself asking similar questions why not give us a call on 01424 777156 for an initial chat – or email us now.
Disclaimer: The information contained in this article should not be considered as specific advice and regarded as generic information only.
Mike Robertson Associates Ltd is an appointed representative of Lighthouse Advisory Services Limited which is authorised and regulated by the Financial Conduct Authority. Registered in England No 4501167. Registered Office 30-34 North Street, Hailsham, East Sussex, BN27 1DW.