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Design of the times

Symponia managing director Janet Davies outlines how a lifetime mortgage enabled a retired architect and his wife to stay in their home

I first met Eric and Martha after their daughter picked up the Symponia guide in a local care home. Sadly, Eric had recently suffered a stroke and was in hospital. Although he was undergoing intensive physiotherapy, his care team had reached the conclusion that he would not be able to return home.

Not sure how to react, Eric’s family had started to look at care homes. They had found a suitable room, with the quoted weekly care fees in the region of £950, and all were resigned to the fact that the move was inevitable.

However, underlying concerns existed on several levels. First, they were obviously anxious about Eric’s future health and welfare but just as important was the likely impact his permanent residency in a care home would have on Martha. Eric and Martha had been married for over 65 years and rarely been apart.

Eric had been an architect and had, over the course of 40 years, painstakingly designed and restored their current home, a 17th Century stone barn. Moving Eric into a care home could put the continued ownership and the ongoing security of Martha in jeopardy.

During our first meeting, which involved Eric, I asked the family the same question I always ask, which is: “Accepting the fact that we cannot change the medical diagnosis, what would you like to do if I waved a magic wand?”

The response was unanimous, they would like Eric to go back home.

Eric needed specialist personal care and Martha was unable to do this. As a potential solution, I asked the family to consider a live-in carer.
Eric and Martha arranged a meeting with an agency, an assessment was carried out both physically on Eric while he was in hospital but also at his home so that the carers could get a feel not just for the type of care needed but where it would be delivered.

I asked the family: “Accep-ting the fact that we cannot change the medical diag-nosis, what would you like to do if I waved a magic wand?”
The response was unanimous – they would like Eric to go back home

Following this, the agency were able to deliver a weekly fee structure. For £700 a week, a qualified and vetted carer would live in one of the spare rooms with Eric and Martha. The hospital care team were satisfied that this presented a workable alternative and arrangements were made for Eric to return home.

The remaining focus and objective now centred around how the care could/should be funded. Had Eric entered the care home, the stone barn would have been excluded from the means test while Martha lived in it and this situation would be replicated now that the care was being received at home (a house is excluded if it is occupied by the care recipient). But as Eric had other savings in excess of the current threshold, he would receive no other funding from the local authority.

Eric had a private pension and over £200,000 invested, Martha also a similar amount held in her own name but as these investments contributed a high proportion of their income, neither partner wanted to alter the investments in any way.

We then discussed the option of equity release, not just with Eric and Martha but with their permission the whole family became involved in the discussions.

Moving to a different, smaller property to realise funds was a non-starter. If the property was to be sold in the lifetime of Eric and Martha, Eric might just as well have moved into his care home.

Neither of them were entitled to any means-tested state benefits so the release of capital would not have a negative effect on their current income levels. I did, however, make sure that Eric put in a claim for attendance allowance. This is non-means tested and tax-free and remains the biggest non claimed benefit in the country.

The next decision was how much money should be released? Did the family just take enough for one year and continue to draw down each subsequent year until the maximum ltv had been exhausted? Eric was uneasy about this as he could see a finite, and therefore limited, number of years involved in the plan.

To help the family gain additional peace of mind, I suggested that they explore the possibility of an immediate care plan. We calculated the income, which could now include attendance allowance and compared that to the expenses, which had to take account not only of the household costs (which largely remained unaltered) but the care costs of £700 each week.

This bespoke calculation left a deficit/shortfall of just under £15,000 and it is was this amount that was submitted to the underwriters for consid eration. After assessing Eric’s health and mortality, the cost of the immediate care plan with a built in automatic 5 per cent annual escalation was £67,000.

As the stone barn was valued at over £500,000, the release of equity was less than 14 per cent of the total value. The family also consulted with a solicitor who ensured that they understood all the impli-cations of the transaction.

Facts and figures

  • Eric had to be discharged from hospital and needed a care package
  • Neither Eric nor his family wanted him to enter a care home
  • Eric and Martha desperately wanted to stay in their own home
  • The live-in care facility enabled the family to realise that their wishes were possible
  • The fees of £700 a week had to be funded by Eric, without local authority contribution
  • Eric refused to alter his existing investment portfolio
  • A lifetime mortgage of £67,000 enabled Eric to fulfil his wish and return home
  • The purchase of the immediate care plan meant that the money would be available to fund Eric’s care costs, no matter how long he lived for
  • Should circumstances dramatically change in the future, for instance, if Martha predeceased him or his health deteriorated very badly, the immediate care plan would move with him

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