When people get older and their health deteriorates, it is common that they feel they have no choice about where they receive their care.  Many are resigned to the fact that they may have to move into a care home, even though they may hate the idea and prefer to stay in their own home.

Couples who have been together for many, many years may feel they have no alternative but to live apart, when one of them requires long term care,.  This can often put pressure on the person who is not requiring care to firstly keep their partner at home for as long as possible, providing the care themselves and secondly, when it all becomes too much, to find a suitable care home and constantly travel to visit their loved one.

Placing a loved one into care can be extremely traumatic for all concerned.  Family members can feel terribly guilty and emotional, particularly if a care home is not where the elderly person wants to be.  Leaving beloved pets and personal possessions behind can also be a huge issue for the elderly moving into a care home.

Care at home could be an option for so many people, but this is often not considered.  There are many good quality providers of care in your own home and the cost is not necessarily more than a care home.  The solution could be to have a live-in carer providing companionship , housekeeping and personal care or, simple someone to come around every day to help with certain activities the elderly person is unable to do themselves.

Employing such individuals can sometimes cause a headache and can put people off receiving care at home. Many agencies do not deal with Pay as you Earn (PAYE) and National Insurance on your behalf but that is not true of all of them.

For those who are self funders (assets of more than £22,250 England) and do not have much by way of liquid capital to help pay for the care may need to consider releasing equity from their homes to fund this care.

Immediate Care Plans are a perfect way of paying for such care as it guarantees the payment each month, for as long as the person requiring care lives and payments can be set up to escalate each year to help deal with increasing care fees costs.

Call me on my freephone number to discuss your circumstances and I will be able to put you in touch with the right organisation and discuss payment options - 0800 6528232

Oscars for The Health Insurance industry

The Grosvenor House Hotel hosted the annual Health Insurance Awards on 16th October 2008. The awards evening is often considered the Oscars for the industry, where providers and intermediaries are recognised for their contributions. All entrants have submitted their application to be considered for the award and a shortlist is then made for a panel of judges to adjudicate.

On the night of the awards three nominees for each award are announced with the winner being invited onto the stage to receive the award.

This year attracted the most ever entrants to the best Long Term Care Intermediary category, with over 140 people nationwide hoping to win this prestigous title. The winner of the award for 2008 was Karen Rayner, founding partner of The Wealth Care Partnership. Karen received the award from TV personality Justin Lee Collins and the Chairman of Partnership, Mr Ian Owen, sponsors of the Long Term Care intermediary category.

During the course of the evening I had a discussion with a senior member of Partnership who had been charged with making the shortlist for the judges to consider. I asked him what had impressed him enough to allow Karen to be nominated. He stated that Karen’s case study provided a well documented and clear description of the client process used by The Wealth Care Partnership, which showed the range of options considered on behalf of the client. Furthermore he added that the Guide to Care Fees Financial Planning created by The Wealth Care Partnership is clearly a valuable client publication that is informative without being patronising.

As her business partner for over 7 years and co-founder of The Wealth Care Partnership, I was immensely proud to see Karen win this award. Not only is it a just reward for Karen’s contribution to the industry but it is also an acknowledgement of the care she has for her clients. Karen carefully explains in detail all the benefits that each of her clients may be entitled to and shows respect and consideration when dealing with sensitive issues.

Karen has been in the financial services industry for 27 years but six years ago, decided to focus her efforts specifically on the financial planning needs of elderly people, an area of financial advice which requires a greater level of technical expertise, and additional qualifications not required by general practitioner IFAs.

Of her recent triumph, Karen says : “I am delighted to have won this award just over a year since our practice was set up to provide specialist advice to people needing to fund their own care fees. Arranging care for an elderly relative can be confusing, emotive and stressful for those concerned. There is a general lack of understanding about the financial implications of funding long term care. Sadly, many people could have protected their hard earned capital from erosion if they had been given the right advice and guidance at the beginning of the process.”

She adds: “It is for this reason, I have produced a simple 24 page guide and The Wealth Care Partnership provides a free helpline to those who are confused and worried about funding care.”

The Wealth Care Partnership was formed only 15 months ago and it is wonderful for our business that Karen has won this award so early in our development. It will help propel us to the forefront of Care Fees planning advice and give assurance to others who have not yet come across us that they will be advised by a team of advisers that includes the ‘Best Long Term Care Intermediary’ in the country.

All of us at The Wealth Care Partnership are very proud of you. Well Done Karen!!

Families looking for information on how to fund long term care for elderly relatives, should call the free Helpline on: 0800 652 8232. The Free Guide is also available on this telephone number.

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.

Paying for the cost of care in difficult economic times.

Going into a residentual care home is a difficult enough decision for the individuals and family concerned, but this decision is becoming even more difficult with the pressures built by the uncertainty in the economy.

Let there be no doubt that care home costs are going to rise above the cost of inflation.

To run a good care home you need trained staff, a quality building with enough space for the residents, good food and a good heating system. Increased regulation has meant that staffing levels have had to go up and these staff, who have typically been offered low wages, are looking for higher pay. Food costs are on the increase and energy bills are rising. As a result the cost of care is increasing.

Faced with these increased costs, the difficulties are further enhanced because there is a slump in the housing market which can effect the sale of the home. Many people are not getting what they thought their property was worth, that is if they are lucky enough to receive an offer. New residents who are going to pay for their own care fees – the Local Authority will only start to fund residents who have capital of less than £22,250 – are often concerned about how they can meet the cost of care and whether their savings are going to last until the property is sold.

It is true that the Local Authority may help some families for the first 12 weeks in care and they do offer an interest free loan facility through a deferred payment scheme. The problem here is that the first option does not last indefinately and with the second a debt is being built up.

Given these concerns our office is now increasingly busy with callers worried about how they can cap the cost of their, or their loved ones, care fees. The answer to this is to purchase an Immediate Care Plan – a special type of annuity to fund the cost of care. If there is not sufficient capital to purchase the care plan but you are waiting for the house to be sold, it is possible to borrow funds from a specialist company.

If you are concerned about the increasing cost of care please give us a call on (Freephone) 0800 6528232 or visit the website www.twcp.co.uk

Good news today for those Equitable Life policy holders who have lost out through the mismanagement of the company and the lack of proper regulation by organisations such as the Department of Trade and Industry, the Government Actuary’s Department, and the Financial Services Authority. Parliamentary Ombudsman, Ann Abraham has stated “The aim… should be to put those people who have suffered a relative loss back into the position that they would have been in had maladministration not occurred”. and she is suggesting that Ministers should set up a compensation fund for policyholders in the Equitable Life.

Equitable’s problems started when its executives mislead their customers into believing their policies were worth more than they actually were and when they couldn’t honor payments under the so called, “guaranteed annuity rate pensions” they tried to pay lower rates to their customers. They were challenged by policy holders and eventually lost their case in the High Court in 2000. The Society was short of the £1.5bn necessary to compensate those policy holders.

Equitable Life conducted its business through their direct sales force from the 60s through to the 80s. I started my career in financial services as an Independent Financial Adviser (IFA), in the 80s and many a time was told by potential clients that they were better served by Equitable Life as they didn’t pay commissions to greedy IFAs and their charges were much lower because of this. So taken in were they by Equitable’s clever marketing and their belief that the products they sold were far superior to any other companies’ products that they wouldn’t consider any other offering. They were often blind to the fact that their salespeople earned large salaries, drove company cars and enjoyed company conferences held in luxurious locations.

Life companies and their Regulators have a duty of care to ensure their policy holders are not mislead and I welcome this report and hope that it all ends well for the policy holders and helps to protect others from a similar fate.

I am getting more and more angry with the poor level of advice being offered to people by certain professional advisers regarding the gifting of assets when someone needs care. There are far too many professionals out there who are dabbling in an area they know very little about and the result is that people are being mislead.

The rules are harsh when it comes to those people who have worked hard all their lives and have a property and some modest savings. If you have assets over £22,250 (2008/09) you will be considered a “self-funder” by social services. Gifting away those assets when your health has already deteriorated and you may need care, will not mean the State will provide. If you speak to a solicitor about gifting your house to your children or into trust, even if it is for Inheritance Tax purposes, please make sure they specialise in advising the elderly. Seek out those who are members of Solicitors for the Elderly in your area. They should be able to tell you about the rules of Deliberate Deprivation and advise you whether the gift would be worthwhile.

An Immediate Care Annuity (ICA) is a special type of annuity that has been specifically designed for those that need to provide an income for life when looking to pay for the cost of care - the care can be provided either in the annuitants own home or in a care home. It is a special annuity since an income can be provided for the benefit of the individual without any liability to tax. Since the annuity is to provide a benefit to a person who is elderly and more likely to be infirm, the rates at which they are paid are high. A return of 20% plus from ones capital is not unusual - a rate not likely to be achieved by any other financial structure.

The great benefit of an ICA is that, at last, the cost of care can be calculated and peace of mind can genuinely be achieved – knowing that the cost of care can be provided for for the rest of ones life is a genuine relief. If the capital is simply put in a building society and withdrawals are made each month to pay for the cost of care there is a certain degree of uncertainty. How long is the individual going to be in care for? Is the individual going to run out of capital? Neither of these questions can be answered when one first goes into care. If capital starts to run short the Local Authority will start to pay some of the fees (the threshold is below £22,250 for England in 2008/09). This is not a position that anyone wants to get into because if the the Local Authority are contributing to the cost of care, it is the Local Authority that will have control as to where the individual receives their care.

The answer to maintaining financial independence is to purchase an immediate care annuity.

The ICA is set up so that the difference between the income (state pension, private pension, attendance allowance) and outgoings (cost of care and personal expenditure) is provided for the rest of the annuitants life. A capital lump sum is required to purchase the annuity and this puts a finite cost to the annuitants care fees. This in turn allows the annuitant to organise the remainder of their affairs .

The cost of the basic annuity will depend on four factors:

The size of the shortfall - how much additional income is needed each month

The sex of the individual – Ladies tend to live longer than Gentlemen

Age – a healthy 73 year old is expected to outlive a healthy 93 year old

Health - a healthy individual is likely to outsurvive an individual suffering from poor health of the same age

It is always adviseable to seek help from an independent adviser who can seek out the most competitive rates. Each insurance company offering this type of ICA has different underwriting criteria and the range of quotes coming back is often quite staggering.

Having decided on which company is offering the most favourable terms it is necessary to decide if any additional features want to be added to the annuity. It is possible to:

Defer the payments for any number of years – which will make the annuity cheaper

Have an increasing payment to take into account of the future rises in the cost of care – this can be linked to RPI, but is tyically increased by 5% each policy anniversary. The greater the annual increase the greater the cost of the ICP

Build in protection. If the annuity is purchased and the annuitant passes away a month later there will be no return of capital unless protection has been purchased. To protect the capital costs money but is a way looking to receive some capital back in the event of an untimely death.

To find out whether an ICA is right for you, or a loved one in care, speak to The Wealth Care Partnership on 0845 3723404. The Wealth Care Partnership offers clear, concise and independent advice helping you make the right decisions for the rights reasons.

It is quite common now for people to consider gifting the home so that the state can fund the care for the elderly people concerned. Indeed, I have just put the ‘phone down from a conversation with someone whose grandmother requires care and she has a property worth around £475,000 and £20,000 in cash. He wanted to know how she could gift the property into trust and avoid paying for her care. The chances are, this will not work. The local authorities are likely to consider this an act of Deliberate Deprivation. If the gift takes place within 6 months of needing care they have the power to recover any sums which have to be paid for care as they will consider the gift never took place, but there is no time limit as to how long after any assets has been gifted that they can take them into account.

Having advised on care fees planning for many years, it is my experience that this step can leave the elderly people in a more vulnerable position. Who really wants to lose their financial independence as well as their choice of care provider, by looking to be funded by the local authorities? What about the care providers, who are forced to accept payment well below their level of fees required to provide a quality level of care to their elderly residents, or ask for family members to top up the local authority payment?

By far the best route to keep your financial independence and peace of mind that hard earned capital is not eroded, is to purchase an Immediate Care Plan (ICP). We set up these plans to cover the difference between the elderly person’s income and the cost of care and the ICP will pay that benefit, totally tax free, to the carers, for as long as that person lives. It can be set up to increase each year, to help keep pace with the increase in fees, and capital protection can be purchased also to cover situations where the elderly person dies shortly after purchasing the plan. These plans protect the assets from erosion and the remaining funds can be invested in a low risk growth investment, which can be allowed to roll up and could pass to the family once the elderly person has died.

So many people embark on financial planning for elderly in care without seeking expert advice. It is essential that advice is sought not only from advisers with CF8 qualification, but those who actively work in this market. It is a minefield and you can get caught out if you haven’t properly planned your route.

The Daily Mail recently published an article that reported on the shocking fact that a large percentage of people who have been saving in pension schemes are not shopping around when it comes to purchasing their annuity when they eventually retire. They used Scottish Widows as one example and stated,

“Of almost £1bn worth of savings that matured from Scottish Widows pensions last year, £593m was used to buy annuities for customers that had saved with it; only £400m worth of savings was used to buy an annuity with a different company.”

Scottish Widows had such bad annuity rates last year that 99% of the annuities purchased with them were for existing savers. So, in other words, only 1% of their annuities were purchased by new money. Their loyal customers have got a bad deal by staying with Scottish Widows and not getting proper advice and taking the Open Market Option which basically allows them to take their pension savings and buy an annuity from another company.

Those people who have health issues are losing out even more by not looking elsewhere for their annuities. Some companies also offer Impaired Life Annuities which pay enhanced rates to those with poor health, or even those whose health is good but their lifestyle could mean that their lives could be shortened, such as smokers or overweight individuals.

With the cost of living going up and people living longer it makes sense to get the best possible income you can from your pension savings so my advice would be to look for the best possible annuity for you at the time and if it’s not with your pension company….speak to a qualified IFA!

There has been much talk about Alistair Darling’s announcement in the last budget regarding, so called “doubling” of the nil rate band for married couples and civil partners. He, of course, did nothing of the sort. Every individual was able to gift up to the nil rate band on death, it was just that so many married couples or civil partners simply left all their assets to their spouse. As there is no tax to pay for assets passed between spouses and civil partners, those individuals lost their tax free nil rate band forever….until Mr Darling’s Autumn 2007 budget, that is.

Now, widows and widowers and surviving civil partners, whose late spouse did not use their full nil rate band on death, irrespective of when they died, can make use of the unused nil rate band on their death. Don’t be fooled though, this is not automatic and it depends on whether certain documentation can be provided on the second death. These are:-

• Marriage or Civil Partnership Certificate
• Death Certificate
• Copy of Will
• Copy of any variations to Will
• Copy of Grant of Probate or Letters of Administration
• If a Deed of Variation or other similar document was executed to change the people who inherited from the estate of the spouse or civil partner, you will need a copy of it.

On the second death Form IHT 216 needs to be completed (a copy can be downloaded from www.hmrc.gov.uk/cto/forms1.htm) You will need to find out who was the executor of the spouse or civil partner’s estate as you will need information from them to complete this form.

You will need to know:

• who benefited under the Will or intestacy of the spouse or civil partner and what the beneficiaries were entitled to receive
• whether any assets, such as jointly owned assets or assets in trust were part of the estate of the spouse or civil partner, and
• whether the spouse or civil partner had made any gifts or other transfers within seven years before the date of their death that were chargeable on their death.

If there are no records, you should try and find out the information about the spouse or civil partner’s estate from others who might know, for example, the solicitor who acted for the estate, the executors or administrators, other family members, close friends.

My advice would be to get these documents and information before the survivor passes away, it could mean £124,800 of inheritance tax savings (ie 40% of the current nil rate band of £312,000).