Would you be financially prepared in the event of you or a loved one needing long term care? Acting early is essential to ensure that should the need arise, you would have the financial means to fund the required long term care. Waiting too long to arrange cover could have devastating financial consequences.This case study demonstrates how AEON’s well timed advice protected their clients’ assets.

Long Term Care

The problem:  Personally funding long term care fees
The benefit:  Protecting your capital and income / children’s inheritance
Suitable for:  Most suitable for individuals and couples over the age of 60

When Bill’s father, George, aged 86, was diagnosed with dementia and his mother, Margaret, was suffering from mobility problems, the family knew they had little choice but to move them into a nursing or care home. Finding a place was not easy. There was one visit which brought back memories of the school canteen with strong smells of boiling cabbage. At another, incontinence pads lay on the ground outside some of the residents’ ground floor bedroom windows.

But when they did find a suitable home, their next shock was the cost. Nursing care can be hugely expensive, particularly because there is only limited help from the State. According to Age Concern, a residential home typically costs about £500 a week, and for those who need nursing care, it can increase to £700 a week.

Most people in England and Wales are means-tested for their ability to pay, regardless of their physical and mental health. Your assets do not have to amount to very much for you to have to pay in full.

Before moving into care George and Margaret owned their own property which was worth about £80,000. Some years earlier AEON had advised them to change the way they owned this property so that it was held as ‘tenants in common’ rather than as a ‘joint tenancy’.

In addition to the property, George had a reasonable income from an occupational pension plus some money on deposit. Margaret’s only income was a state pension. Before moving into care they had to sell their property and, because it was owned 50 / 50 between them, this meant that they each received about £38,000 after expenses.

George was able to fund the cost of his care fees from his income, but Margaret had to pay for hers out of her share of the sale proceeds. She is continuing to fund this but it is depleting the value of the money in her bank account. However, once the value of this capital falls below £23,250* an element of funding will be paid for by the Local Authority. They will pay the full bill once her capital reduces below £14,250.* However, if the property had been sold when owned as joint tenants, the whole of the sale proceeds of £76,000 would have been subject to assessment by the Local Authority. By separating out their assets it meant that at least George’s capital remained safe and untouched and it will ultimately be inherited by his son, Bill.

The important point to note here is that if George and Margaret had not taken advice at an early enough stage this would not have been possible. AEON was involved with the couple many years ago and the change of property ownership occurred before there was any reason to expect that they may need care. Had it not been done sufficiently early, a Local Authority has the power to decide that the transaction took place with the intention of depriving the Local Authority and they would be able to reverse it!

*These figures change from time to time but were correct as at January 2013 for people in care homes in England