So the subject of social care for the elderly is now ‘sexy’ in the journalistic and political sense, anyone would think there was a general election on the cards! Having waited 2 years for the Green Paper on Adult Social Care we now see all main parties using this document, and the debate that followed, as a political football with a view to scoring points rather than achieving effective change, changes it will take years to put in place.

The frustration of those working with families and individuals involved in arranged long term care continues and worry is fuelled by inaccurate and emotive cherry picking of the facts by both politicians and the the media alike. Importantly those in need of care cannot put their needs on hold to await the outcome of the current debate.

As care fees specialists, our advice line continues to answer calls from those concerned by the prospect of being forced to sell their home to fund care as it is this topic that is wheeled out as the focus of the debate whenever the need arises. Let’s be clear, the option to selling a property once the owner has taken up permanent residence in a care home is in the vast majority of cases the most practical and financially viable solution.

In this age of extended and independent families, sons and daughters have their own family homes, often in another area of the country to their loved one in need of care. There is no practical need to keep the property going once their relative has gone into the care home. In the event that a spouse or dependent relative will continue to reside at the property, there is no issue; they will not be forced to sell their property.

Let’s consider the alternative to selling, that of letting, to let the property will change the tax status and the taxable income from the property rarely covers the shortfall in care fees. This option will also incur legal and maintenance costs which will further reduce the income for the letting.

The ideal situation for anyone facing the need to fund their own care fees is undeniably to cap the cost of care and to ‘ring fence’ any residual capital for their future desires or for beneficiaries. Financial products do exist that are specifically designed to achieve this and to ensure no one need worry about ‘outliving’ their capital or have concerns that they may need to change facilities should that happen.

My own great dismay is the reluctance of the public sector to engage with specialist financial professionals and encourage families to explore the financial alternatives that could mean care fees would be guaranteed for life. This would benefit both parties as the care recipient need have no fears about covering the cost of care and the local authority will not be required to fund care when an individual’s money has run out thus preserving funds for those for whom local authority funding is the only option.

The Wealth Care Partnership continues to work towards raising awareness of financial solutions available for those facing the need to fund care NOW whilst engaging in the debate about future funding at every level. We encourage everyone to lobby their MP’s and write to local and national press on the issue’s of current and future funding options, and to continue to do so until a workable solution is found.  Lets have the agenda driven by the electorate for a change.

Much has been written and broadcast on the subject of care fees, pre and post publication of the Green Paper on Adult Social Care. As with any emotive subject, we may expect a varying degree of accuracy, I looked at the subject on the internet this weekend and found sites referring to changes in 2007 as forthcoming! Indeed I noted the Governments own website, Diectgov, publishing outdated figures with regard to the Means Test Threshold.

Of greatest concern, however, are the anecdotal references to individuals being forced to sell their property, during a declining market, to fund care fees. This is a highly contentious issue likely to cause a great deal of concern and distress to those arranging care and whilst it is an option, it is not a ‘fait accompli’.

Often the only realistic way to fund Care fees is to sell, or release equity from, the family home, the proceeds may be used to purchase an Immediate Care Plan (ICP) or invested in the hope that the money will fund the care home fees for as long as care is required. Equity release and home reversion schemes may be considered where a spouse continues to live in the property, however, this is not possible where a property will be left empty once someone has made the move into a care home.

Through consultation with specialist advisers such as The Wealth Care Partnership, plan providers continue to improve their products to suit the changing demands of the market.

One such example comes in the form of an innovative way to pay care fees, without the need to sell the family home. Essentially, it is a loan, secured against the property, which is then used to purchase an Immediate Care Plan. Interest is payable on the loan but is ‘rolled up’ and does not become payable until the property is sold, or upon death when the loan and all accrued interest becomes payable. The loan can be repaid either partially or in full at any time without penalty.

What sets this aside is that the loan is available on empty and let properties giving the family the option to await optimum market conditions before selling. The Care Plan Payment Option typically means that the funding of Care fees can start as soon as the need is identified without having to wait for the property to be sold.

Equity Release providers also continue to improve the flexibility of their offerings making scheme’s less restrictive and a more attractive financial planning tool. Indeed Safe Home Income Plans (SHIP) is launching a debate involving regulators, Government and consumer organisations on how these products may continue to evolve to help with the huge pressures of retirement and care funding faced by older people.

The need for specialist advice has never been so great, In the UK there are 45,000 financial advisers, yet of the 2,000 holding the necessary CF8 qualification, only 150 are active in care fees planning. As my foray through the world wide web this weekend has proved, there is a wealth of outdated and inaccurate information available out there. The face of financial planning in retirement is changing bringing new challenges to financial advisers and product providers in their efforts to ensure their clients may fund the lifestyle they seek in retirement from the wealth accumulated during a lifetime of work. When did you last review not your finances, but your objectives in retirement?

Those who have assets over £22,250 (England - 2008/2009) will not get funding by the Social Services for their long term care.  The rules are brutal for those elderly who have saved all their lives and only have modest savings and the family home.  Most do not have enough income to pay for care and with care fees ranging from around £400 per week to over £1,000 per week, they need to use their savings and/or sell their home.  Here are some tips to help those people who are “self funders”:-

1.  Make sure you claim for Attendance Allowance for the person requiring care from the Department of Work and Pensions (DWP).  You can claim online at www.dwp.gov.uk or print off an application form.  This is not means tested and is tax free.  It could bring in either £44.85 per week or £67 per week - 2008/2009).

2.  Ensure the person needing care is receiving benefits they are entitled, such as Pension Credit.

3.  If a spouse remains in the home, claim for single person occupancy for Council Tax at your local council offices.

4.  The home is excluded for the Local Authority Means Test for the first 12 weeks of needing care.  This is not always made clear.  If the person in care has assets below £22,250 the Local Authority must fund the care for the first 12 weeks.  In certain circumstances the home is excluded from the means test beyond the first 12 weeks.

5.  If your savings are held within single premium life insurance bonds, where there are lives assured on the contract, these savings must be excluded from the Means Test.

6.  You may qualify for Fully Funded NHS Care.  This is not means tested however, you would only qualify if you need long term care following hospital treatment or because of a chronic illness or disability.

7.  If a property needs to be sold, seek specialist help with the sale.  There are companies who specialise in selling homes for the elderly in care.

8.  Seek professional advice from a financial adviser who is qualified for long term care.

9.  Consider purchasing an Immediate Care Plan.  This will pay a benefit to the care provider, tax free, for the rest of your life.  It’s a great way to cap the cost of care and provide peace of mind that you won’t run out of money.  See our other blogs for more information on Immediate Care Plans.

10.  If you haven’t already set one up, get advice on creating a Lasting Power of Attorney which will enable your loved ones to make financial decisions on your behalf if you become mentally incapable of making your own decisions.  You can also set one up to deal with your personal welfare too.

If you would like more information on what to do financially, if someone you love needs to go into care request a free copy of our Guide to Care Fees Financial Planning via our website www.twcp.co.uk.