Louise Osborne, Partner at Albert Goodman and member of the Society of Later Life Advisers (SOLLA), explains why care fee planning in advance is so important.
Fees can be daunting when entering care for the first time. Whether it’s domiciliary or residential care, the prospect of setting up what is often the largest standing order you have ever established, and for that standing order to be in place for the rest of your lifetime is, for some, overwhelming. So much so, it can sometimes be the barrier which precludes people from getting the care they need until a crisis occurs. It can also be a worrying time for the family, torn between getting the very best care for their loved one and the daunting prospect of potentially running out of funds and being asked to pay the fees from their own resources.
There is little information available in the market, and many sources merely set out the various options without actually providing personalised advice and recommendations. At Albert Goodman Financial Planning, we work with residents and their family to answer their most pressing questions about making their money last as long as possible; when it may run out; and what will be left as an inheritance. We carry out detailed cash flow analysis to answer these questions, and others, for people planning their care fees.
We consider many different options with clients taking into account their income, capital and statistical life expectancy, enabling them to make informed decisions and to remain in the care home of their choice for as long as they may need to. Options include:
- Renting our their home or other property
- Holding cash accounts which are accessible, with financially strong institutions, protected by the FSCS, and maximise interest rates available.
- Taking some investment risk with the aim of growing their capital
- Purchase of a long term care annuity.
This type of care fee planning is also beneficial to care home owners and managers, as it provides them with certainty over their fee payment and avoids difficult conversations in the future about long-term fee payment. The following example shows how our advice can help.
Mrs L had a statistical life expectancy of 9 years, and her care fees were £778 per week. When we were approached to provide her and her family with a care fees strategy she had sold her home, and had £156,493 in the bank. We ran several scenarios which showed that her cash would have run out in less than 6 years, investment risk was not suitable, and she had no property to let. She purchased a LTC annuity for £133,900, giving her peace of mind that she could remain in the care home of her choice for her lifetime and had a certain legacy for her loved ones of £22,593.