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Advice Through The Care Maze

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Ian Francis, Specialist Adviser

Paying for care fees when self-funding

We all hope to enjoy a long and healthy retirement, maintaining our independence.

But this is unfortunately not always possible.

Whether care is required in your own home or in a residential home, paying care fees can quickly use up wealth.

Whether you are planning your own care provision, acting as an attorney, or assisting a family member with paying care fees, we are here to guide you through the options available

Your Options

There can be a whole host of questions that you may have.

Each of the ways for paying for care has advantages and disadvantages and their suitability will depend on your situation and what you want to do.

Our aim is always to provide peace of mind during a time when difficult decisions need to be made.

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Using Income

If you are able to use your income then this would stop eating into your capital.

However, there aren't many people who can afford to meet the entire cost of care fees simply from their own income.

You can also consider key state benefits and other help available.

Could I Rent Out My Home?

You could rent out your home to provide an income to pay for some, or all, of the costs of care if it is in a good condition.

Its advantages are that your property would potentially benefit from any increase in value as well as give you an income.

The potential disadvantages include difficulties with maintaining the property and tenants, and as a landlord, you would need to consider the safety and other legal requirements for tenants.

This option might cause unintended tax issues, so it would be best to speak with us about your options first.

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Borrowing Money
Deferred Payment Arrangement

The Local Authority may agree that you can enter a Deferred Payment Arrangement.

With a Deferred Payment Agreement, you do not need to sell your home, but in return, the Local Authority will place a charge on your property and charge you a small amount of interest. It is a loan to pay for the care costs that is repaid when the person's property is sold or dies.

Retirement Interest-Only (RIO) Mortgage

'RIO' mortgages may be available to people over 55 who can afford it. You pay the interest each month, which means the amount you owe doesn’t increase over time.

Equity Release

These schemes help homeowners aged 55 years or older to release some of the value of their property without the need for selling it or moving elsewhere.

This enables you to use the value of your house to pay for your care fees.

How much you can release depends on your age, health, and how much your home is worth.

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Using Capital

If you are able to use your income then this would stop using up your capital. However, there aren't many people who can afford to meet the entire cost of care fees simply from their own income.

Care Fees Plan

A Care Fees Plan (sometimes called an “immediate needs annuity” or “care fees annuity”) is a type of insurance policy. It would generate a guaranteed level of income for life, based on the individual’s state of health.

Using Savings and Investments

Just using the money that has been saved and invested may feel like the right answer, but putting the money in a low-earning bank account would, in whatever form, normally be a bad idea. The value of funds needs to keep pace with inflation over the longer term, but not invested in high-risk investments.

Selling Your Home

Your home may be the best asset that you can rely on to pay for care fees over a lengthy period. But this might not be the best solution for you and will affect your eligibility for Local Authority care funding support.

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Running Out of Money to Pay Care Fees

Most Local Authorities will ask that you contact them if your assets are around or below £30,000, so that they have time to conduct a Care Needs Assessment, checking on whether you qualify for any help from them, and then to conduct a financial assessment, to check your finances.

  • An individual must be assessed as having severe enough needs for the Local Authority to pick up some or all costs of their care if they qualify.
  • Local Authorities then have a legal responsibility to provide financial support if your assets and income fall below certain thresholds, and you are eligible.
  • But it's important to be aware of the implications.

The Local Authority is only likely to pay a care home at their set rate - usually well below the level that care homes charge "self-funders".

  • Either family or friends must pay the difference between the Local Authority rate and the (usually higher) fees that the care home charges (known as a 'third-party top-up'), or
  • You may need to move to a different care home, which can be very distressing for all involved.

Our role is to help you understand just what help IS available and what other options you have.

What Our Clients Say

"When my mum came out of the hospital and straight to a care home with dementia, my mind was a whirlwind - making sure she was ok, panicking about money.

"I didn't know where to get help about who was doing what, why, and how to look after things.

From my first call to Ian I felt a weight had been lifted from my mind. I owe so much to Ian's service, knowing my mum is being looked after and the bills are paid."

Andrew, Lincoln

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What's on your mind? Let's talk...

We offer a free, no-obligation, initial telephone consultation for new clients to answer some initial questions and help you with some first steps.

After that, we will then ask if you would like to set aside more time at a good time of day for you, when we can meet in person, on video, or by phone, whichever is most convenient for you.

If you would like to use our services after our initial telephone call then we charge an hourly fee of £150, including travel time. We can also agree on a fixed fee depending on what you need.

What it means to be SOLLA accredited

As a financial planner accredited by SOLLA (the Society of Later Life Advisers), I know that the transition to elder care happens more smoothly and is often more aligned to the expectations of the individual and their family when plans are made in advance. This includes advanced planning around finances.

It’s often a surprise to people that later-life financial planning is a specialist area within the wider field of financial advice, but it is!

Clients requiring financial planning in their later life benefit from advice that is clear and concise. Such advice comes from an adviser that is suitably qualified and experienced to advise them and manage their financial planning.

This means you can work with an expert in funding care (whether for a care home or in-home care) and other later life financial matters – ensuring that money is one less thing to worry about when arranging for your own short or long-term care, or that of a parent.

We have been advising clients on long-term care, Lasting Powers of Attorney, Will writing and retirement solutions for several years now, backed up not just by professional qualifications but also by the membership of various professional bodies, most notably the Society of Later Life Advisers (SOLLA) and the Personal Finance Society.

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