I met Caroline & Robin when the family solicitor asked me if I could help with locating a suitable care package for Robin’s mother, who at 88 was starting to become a little bit forgetful and was no longer safe to live in her own.
The family had been told by the dementia clinic that patients suffering from memory loss/dementia were sometimes able to minimise the deterioration if they stayed within familiar surroundings. Robin & Caroline had wanted mum to stay in her own home but had assumed that moving into a safer and more secure environment was the only option.
By the time I met them, they had visited several homes but as mum still had moments of clear lucidity, she was not at all relishing the prospect of dismantling her life and moving into a care home.
The average cost of care in the UK is currently in the region of £600 but as with house prices there are marked region differences. Personal choice will also dictate the fee range and it is not unusual to find homes at the premium end of the market costing £1,000 a week.
Robin & Caroline wanted mum to continue enjoying her discerning lifestyle and had narrowed their search to two homes, both providing specialist dementia care and both with fees around the £950 a week mark.
During my first meeting with them, mum was present although both Robin & Caroline had the authority to act under a power of attorney. We talked about the financial aspect and explored the legislation and its implications for mum. Straight away, it was obvious that mum was not claiming attendance allowance. To be honest, this was not that surprising as although this is a non-means- tested and tax-free state benefit, it remains the biggest unclaimed allowance in the country.
When the conversation turned to mum’s wishes and their objectives, I discovered that they all wanted mum to stay at home but had dismissed the idea as unworkable and unrealistic.
Care fees planning advisers need to have a good knowledge of all types of care and as such we discussed the possibility of mum staying in her home but with a live-in carer. This was something that the family were actually unaware of but as an alternative solution for mum it was something they were very keen to explore.
The family then met with the live-in care agency and after an initial assessment, both the agency and the family were able to work out and agree on the most appropriate care and carer for mum.
The knowledge that mum could stay in her own home was a huge relief to Robin & Caroline and it was obvious to see the change in their demeanour and approach but there was still one thing that was worrying them. It is what worries most families at a time like this and that is the tricky subject of funding the care. They now knew that the live-in carepackage would cost mum £750 a week, which did come as a surprise as it was considerably less than the two shortlisted care homes but it still needed to be covered.
Having already looked into mums finances, I knew that she had a total net income of £16,000, which was increased to just over £18,000 after attendance allowance had been approved, £160,000 in the building society and a property worth about £200,000.
All the family wanted mum to stay at home but they had dismissed the idea as unworkable and unrealistic
Under current legislation, the property would be excluded from the means test for as long as it was occupied by mum but her existing capital and income would exclude her from further local authority assistance. This meant that she would have to fund the care fees herself. The fact-finding exercise taught me that mum needed about £8,000 a year for her fixed costs, which included all her bills and essential lifestyle choices, such as books, taxis and Waitrose home delivery.
This left her with just over £10,000 in unassigned income to put towards her care bill. A simple calculation let us know that she had an annual shortfall in her income of £29,000. The family had several options, they could do nothing, which sounds strange but it should always be considered. This means that mum could dip into the money in the building society. Taking at least £29,000 out each year would mean that the money would last for about five-and-a-half years.
The second alternative was to look at reinvesting the money, with the objective of generating additional income. Sadly, it would require an interest/withdrawal percentage of just over 18 per cent to make this option really feasible as a stand-alone solution.
Alternatively, mum could consider an immediate needs annuity. These plans are designed for people in or about to be in need of care, their special under-writing and tax advantages make them a viable option and while not a universal panacea, they should form the lynchpin of every care fees planning case such as this.
After the underwriting process was completed, we knew that the dedicated premium for mum was £109,320. This included an automatic 5 per cent annual escalation but no capital protection. The family got quotations for the protection but decided against it.
After considering all their options, the family purchase the immediate care plan.
In summary, by working with a specialist care fees planning adviser, the family achieved the following:
- They discovered a real alternative to mum entering a care home
- Mum remained happier and secure in her own home
- The care fees will be covered for the rest of mum’s life
- If her illness progressed and she did need to move into a care, the immediate care plan will simply move with her
- They removed any worry about the money running out or mum having to sell the house to fund her care.
Janet Davies Joint founder and MD Symponia