We have had a number of situations arising recently, here at Blue Sky, where we have given guidance and advice around the funding of care. For a loved one to understand someone’s care needs, organise their care and then work out how it can be funded, is far from easy. Nothing really prepares us for this demanding exercise, add the emotional turmoil into the mix and this becomes an anxious time for all concerned.
In plain English; long term care with tender loving care? Is it possible?
How easy is it to obtain the right type of care and for how long can care be funded?
Most people have a vague understanding of what is involved but, for the majority, it’s a topic that is given a ‘wide berth’ because we hope we won’t be faced with the dilemmas around care.
At Blue Sky, we encourage our clients to plan ahead and consider the ‘what ifs?’ We always allude to the impact of care and how this will affect financial well-being. All of our clients will have to self-fund. Yet, in the UK, there are currently no schemes or plans which can be prefunded to help pay for care. If you want to have a good retirement, you typically pay into a pension. If you want a desirable level of care then you should be able to pay into a scheme that helps fund this care. We hope innovation in this space (possibly around annuities) will deliver much needed assistance in the future.
At the moment, many peoples’ idea of planning is to give assets away to try and get their loved ones’ assets below the means test (£23,250). The reality, however, is that this can be far from easy but it also begs the question about whether you want the Local Authority to be responsible for delivering care to loved ones!!
So, how should you fund care costs?
It very much depends upon the specific situation of each individual. The key is to be as in control as possible, not the Local Authority or any other outside influence. Most of us want the best care possible but also desire continuity of care. When considering how to fund care, it is worth undertaking as much research as you can. Make the most of allowances like the Attendance Allowance. The good news is that there is now more information available, but the bad news is that this is often laden with confusing terminology.
…and, if it wasn’t confusing enough, then the Government go and move the goalposts. The care cap set at £72,000 was due to be introduced from April 2016, however, the Government has now announced that it is to delay this timetable, as further consultation is required.
My message is to plan ahead wherever possible, make the most of allowances, evaluate all the options and then speak to someone who can provide independent advice without any emotional bias.
In a low interest rate environment, funding care is a challenge. It is tempting to consider all manner of ways to eke out a higher income and/or make the money last (buy-to-let/equity release) but, before you forge down a particular pathway, ensure that you always have control and are able to respond to changing care needs and rising care costs.
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