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The Realities of Self-Funding Long Term Care and Protection of Family Assets

The Realities of Self-Funding Long Term Care and Protection of Family Assets

We all recognise the need to help those that are more vulnerable than us, especially as we head towards old age. However, it sometimes feels that those who have been able to provide for their own support at retirement and throughout their old age are rather left to their own devices. Consequently, when it comes to the complicated world of long-term care, this can end up being both confusing and expensive.

Yet, it is interesting to note that nearly half of all people in long-term care are either fully or partially self-funded and this is expected to continue as the demand for long-term care continues to rise. Whilst the population gets increasingly older, austerity means that huge pressure is put on funding for all situations and that includes long-term care.

In many instances, the actual funding of the long-term care is only part of the issue. Whilst it is clearly very important to consider how best to finance the care, the correct wording in wills, use of trusts and a lasting power of attorney will support the process, ensuring that all parties are comfortable with the responsibility. But these too are complicated.

It should be noted the Government has begun to recognise some of the problems that are beginning to occur and The Care Act 2014 is looking to address some of these issues. Big changes concerning support and resource are being put into place for April 2016 (although the cap on care costs has been delayed until 2020), but it still begs the question:

Where do you go for advice and support when considering your own Self-Funded Long Term Care options?

Independent Financial Planners recognise the help and support they can offer, with specific qualifications being required to deal in this complicated area. Solicitors have always been an excellent source of knowledge and support, especially when it comes to things such as lasting power of attorney, but more increasingly, Independent Financial Planners can help with matters such as financing, investment options and income requirements.

Often, a Financial Planner will work closely with the solicitor to ensure all options are considered. However, it is often worth speaking to a Financial Planner initially, before you have any legal discussions, so they can help you with three key areas that have to be addressed.

  • Firstly, what is the Care required for the individual? This may range from simple home help to 24-hour nursing home care and naturally the fees vary enormously. We often consider long-term care in terms of the requirement for a nursing or care home, but it may just be either medical care including rehabilitation care, or simply social care, such as home help or even meals on wheels.
  • Secondly, what are the circumstances of the individual? Do they live at home alone, with a partner or family, are their needs immediate and is care required short term or long term? All of these issues may affect the funding levels that you will have to provide as well as options available to you through financial products, like Equity Release and Immediate Care Annuities.
  • Finally, what are their financial circumstances? Is there a lump sum, regular income or can a fixed asset be considered such as an investment or even the family home? It is a very complicated matter and it is vitally important that you get the right financial and legal advice.

Once the circumstances have been considered, there are then many options that can be developed to ensure the individual and their family get the best possible outcomes. Let’s look at some of the options available:-

Property – In many instances, the home is the largest asset for an individual and is normally the biggest topic of conversation. Can the property be sold, does a partner still wish to live there, can we release some cash from it, or could the care be provided whilst still living at home?

Using Investments/Cash/Income – If able to fund using assets other than the home, this is easier but is still not without problems. Cash and Income often don’t keep pace with inflation, which is especially important with increasing fees, but using longer term investments may cause investment risk and potentially a bigger problem should performance be poor.

Annuity Purchase – Certain Companies will offer the ability to underpin the fees with a guarantee, but these are expensive and potentially complicated.

In most instances, the best solution will be a combination of all the above options, and it is important the Financial Planner finds a solution that considers not only the individual’s circumstances, but also that of the partner and family. This is where a solicitor is vital as Trusts and Lasting Power of Attorney can offer support and protection for family members.

There is no question that long-term care can be both complicated and stressful, yet with the right help and support solutions can be found that benefit all parties. It is vitally important that you obtain as much information and advice as you can and a Regulated Independent Financial Planner, especially one associated with a solicitor practice, is one of the few places that can effectively support those who are self-funding.


Susan Tague (Dip) PFS, Altero Financial Services Ltd (www.altero.co.uk). For more information please call 01895253559 or email office@altero.co.uk.

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If you would like to write a new will or update an existing will, leave money in trust for a young relative, or are struggling with probate issues, call us our wills, trusts and probate solicitors on 01494 790002. Alternatively, email us at estatemanagement@ibblaw.co.uk.