Partner Neil Whitaker of Goodman IFA reveals his top three tips for preparing for future care fees.
1: Have an up-to-date Will and LPAs
Before starting to make any plans for your future care, it is prudent to have an up-to-date Will which reflects your current wishes. In addition, executing a Lasting Power of Attorney (LPA) is key, as this will make sure your best interests are protected.
LPAs are important. Many married couples wrongly assume that they can make decisions if their partner loses capacity. But, without an LPA, there is nobody – not even next-of-kin - who has an immediate right/duty to manage an individual’s affairs.
There are two types of LPA – property and financial affairs and health and welfare. Without the former, no one can do anything with your finances until the Court of Protection has appointed a deputy. This is an expensive process and can take up to six months – a long time if you are at a crisis point and needing care.
Once the property and financial affairs LPA is in place, it can be used as soon as it’s registered, with your permission. In this case, your attorney has the power to make decisions about your money and property, such as managing your bank account and paying bills.
The health and welfare LPA is required because medical practitioners are increasingly refusing to accept instructions, even from close family, without one. This LPA can only be used when you’re unable to make your own decisions and are deemed to have ‘lost capacity’. It gives your attorney the power to make decisions about things like your daily routine, medical care and moving into a care home.
2. Apply for Attendance Allowance
As you soon as you require any kind of care, make sure you apply for Attendance Allowance; this allowance is non means tested and tax free. It is intended to help you with extra costs that come with having somebody to look after you, although you do not have to have someone caring for you full time in order to claim.
It is paid at two different rates and how much you get depends on the level of care that you need. Broadly speaking, the lower level applies where no care is needed at night and the higher level if night-time care is needed.
Attendance allowance is still payable when care is received in a residential setting and, potentially, if you receive other benefits, these might increase if you get Attendance Allowance.
The application form is quite complex but Age UK offers a service to help you to complete the process.
3. Seek advice
Research studies show that only about 7% of people seek advice on how to fund care fees. For most there will be a large shortfall to be made up after comparing care costs with guaranteed income received from State Pension, private pension and Attendance Allowance. This shortfall has to be funded from capital and far too many people simply hold the capital in a bank account and draw down from it.
People are living a lot longer now than in previous generations, which means that they are also in care for longer and money could run out, potentially resulting in a disruptive move to another care home. There is also a risk of not being able to leave an inheritance for your children, which is often a secondary objective.
At The Goodman Partnership, we understand the emotional upheaval and stress felt by those who need to find and fund care either for themselves or for loved ones. New clients often speak of the difficulties they have faced in getting the clear guidance and information they need to help them make important decisions – ones that often have to be made quickly and at a point of crisis.
The advice we provide does not centre purely on how to fund care fees; our approach is holistic and includes being able to signpost to other professionals like solicitors for Wills and LPAs or those who can assist with finding the most suitable care home or domiciliary care.
We can also make sure that any eligible benefits are being claimed, encouraging people to insist on obtaining an assessment to see if NHS Continuing Healthcare would apply, meaning that care fees would be payable by the NHS.
Both my colleague, fellow Partner Andy Kirk, and I have been awarded the Later Life Adviser Accreditation and are full members of The Society of Later Life Advisers (SOLLA), which gives clients peace of mind about the advice they receive from us.
Neil Whitaker is The Goodman Partnership’s longest serving Partner and has more than 30 years’ experience in the world of finance, having spent four years in banking before moving into financial planning. He joined the firm in 1993 and became a Partner in 1997.
He is a full member of the Society of Later Life Advisers (SOLLA) and an Affiliate of the Society of Trust and Estate Practitioners (STEP), while he has also built considerable expertise in advising Trustees on suitable investment strategies.
Neil says that, from a professional point of view, becoming a Chartered Financial Planner and, in July 2010, becoming the first adviser in Kent to be awarded the Later Life Adviser Accreditation are his proudest achievements.
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