Where a Care Recipient owns savings and
/or investments along with their property it is often a simple
task to allocate funds from those savings to pay for one of the
many forms of Care Solution.
However, in many cases, an elderly person’s only asset is the home they
live in. Local Authorities will insist that where no spouse, elderly relative
or dependent individual lives with the person requiring Care, the house forms
part of the financial assessment to determine the liability for the payment of
Care fees. Unless the property, together with any other assets, is valued at £22,250*
or less (unusual) the elderly person will have to use it in some form to pay
for those fees, with no support from the Local Authority. In
the majority of cases the people making the decision on just how the property
is utilised are the members of the Care Recipient’s immediate family.
* Rates will depend on where you live in the United Kingdom. Call 0800 298 1600 or e-mail advice@care-solution.co.uk for more information.
At Tailormade we recognise the emotive issues involved where
the family home may be the only asset. Perhaps there is the
hope that a stay in care may only be temporary, or that some
other last minute solution can be found. Maybe the property
can be rented out to cover the shortfall in fees payments?
Once these and other possibilities have been eliminated the
families will usually, but reluctantly, reach the decision
to sell.
But the problems may not end here unless the family is prepared
to move swiftly. Let’s look at an example:
Mrs A requires care in a residential home at a cost of £600
per week. She has an income totalling just £135 per week,
comprising her basic State Pension and Attendance Allowance
paid at the higher rate. Her property is valued at £140,000
and is her only asset. Mrs A has been advised that the Local
Authority will ignore the value of the property for the first
12 weeks of her stay in care. She has been in care for one
week:
Scenario 1
(Pass) |
Scenario 2
(Fail) |
Jan 20th |
First appointment with Care Consultant.
Initial medical information is gathered and a Long Term
Care Calculator is used to determine the best route forward.
An Immediate Care Plan is recommended, but this must
be funded from house sale proceeds. Medical forms are
sent off the same day, and Estate Agents are instructed
the same week. |
Jan 20th |
First appointment with Care Consultant.
Initial medical information is gathered and a Long Term
Care Calculator is used to determine the best route forward.
An Immediate Care Plan is recommended, but this must
be funded from house sale proceeds. Medical forms are
sent off the same day. Family uncertainty delays instructing
an Estate Agent. |
February 20th |
Medical information is correlated and
sent to all companies offering Immediate Care Plans for
quoting purposes. The property is on the market, has
received 5 viewings, and 2 are considering an offer. |
February 20th |
Medical information is correlated and
sent to all companies offering Immediate Care Plans for
quoting purposes. No firm decision has been made on placing
the property on the market “until mum settles in”. |
March 6th |
All quotations are now received and the
Care Consultant has prepared a report confirming his
original
recommendations and including accurate costs of the least
expensive Immediate Care Plan. An offer on the house has
been accepted at the full asking price of £140,000. |
March 6th |
All quotations are now received and the
Care Consultant has prepared a report confirming his
original
recommendations and including accurate costs of the least
expensive Immediate Care Plan. No decision on the house
yet, but no hurry because Social Services are paying fees
for the time being. |
March 28th |
House sale completes and Care Consultant
completes any outstanding paperwork and cheques. The
money is
taken to pay for the Immediate Care Plan, and the remaining
money (after expenses and setting aside of cash) is invested
on
behalf of Mrs A to cover unforeseen situations and to provide
a legacy for the family, hopefully for the distant future. |
March 28th |
2 weeks of the property disregard period
are left and as yet, no action has been taken on the
property sale. |
April 11th |
Everything is complete, and the transition
between Social Services temporary funding and Private
funding has been handled smoothly. All parties are happy,
Mrs A has the care of her choice for the remainder of
her life, and she has also provided the legacy for her
children that she always hoped would be there. |
April 11th |
The 12 week disregard period is up. Reluctantly
the family admit defeat and place the property on the
market. However, the care home starts to ask for the
fees shortfall and there are no immediate funds available. |
|
|
July 5th |
The property sale finally completes,
but the family have run up a debt of almost £6,000
to the home and got off to a poor start. Their potential
inheritance is therefore reduced accordingly. In addition
the terms of the original quotes from product providers
have expired, and new quotes have to be obtained, resulting
in further delays and therefore cost. |
As you can see, the “Pass” scenario allows families
to move smoothly forward and provides total peace of mind.
The decision to sell is often a hard one, but necessary to
ensure that funds are available to solve the problem of Care
Fees shortfall.
|
