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Caring financial Advice
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FREEPHONE 0800 0197 714
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Affinity Financial Awareness -
Care Division
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The Property Problem
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/Civil Partner, 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 £23,250 (in England
and Northern Ireland, £22,000 in Wales, £22,750 in Scotland) 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.
Here at Affinity, 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 fee payments? Once
these and other possibilities have been eliminated the family will usually,
but reluctantly, reach the decision to sell.
But
the problems may not end here unless the family are 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 £175 per week, comprising her basic State Pension, a
small private 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:
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Scenario 1 (Pass)
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Scenario 2 (Fail)
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Jan 20th
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First appointment
with an Affinity 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.
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Jan 20th
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First
appointment with an Affinity 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.
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February 20th
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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.
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February 20th
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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”.
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March 6th
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All quotations are
now received and the consultant has prepared a report confirming his
original recommendations and including accurate costs of £47,000 for the
least expensive Immediate Care Plan. An offer on the house has been
accepted at the full asking price of £140,000.
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March 6th
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All quotations are
now received and the consultant has prepared a report confirming his
original recommendations and including accurate costs of £47,000 for 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.
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March 28th
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House sale completes
and the Consultant completes any outstanding paperwork and checks. £47,000
is taken to pay for the Immediate Care Plan, and the remaining £85,000
(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.
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March 28th
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2 weeks of the
property disregard period are left and as yet, no action has been taken on
the property sale.
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April 11th
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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.
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April 11th
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The 12 week
disregard period is up. Reluctantly the family admits 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.
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July 5th
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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 increased costs.
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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.
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