It can be a very stressful period when you (or a close relative) are no longer able to look after your daily needs. Although the NHS and local authority can provide some financial support depending on your needs and circumstances, such funding is limited at best, and is often subject to means testing.

In our experience people have the following concerns:

• You may want to receive care in your own home for as long as possible.

• If you need residential or nursing home care you will want to stay in a home of your choice.

• You will want the peace of mind of knowing that your fees will be paid for as long as necessary

It can be important to ensure that whatever capital you have available isn’t prematurely depleted.

Case Study

Mrs A aged 85 requires residential care. Income of £17,060 pa including Attendance Allowance. Care home fees plus personal spending £30,800 pa leaving shortfall of £13,740 pa. Total assets £398,000 leaving potential Inheritance Tax charge as no transferable Nil Rate Band available. Ineligible for means tested benefits. Recommendation to use £90,000 to purchase index linked deferred annuity to guarantee payment of shortfall. Also removes IHT liability.

Mrs A and family did not want to pay £90,000 in case Mrs A died in the near future and the sum was lost to the family. An alternative recommendation for Mrs A to settle 3 loan trusts of £100,000 each and retain £98,000 cash. Then arrange for monthly repayment of the loans to cover the shortfall in care home funding. Each loan repayment reduces the IHT liability and growth of the trustee investments is outside Mrs A's estate. The downside is that there is no guarantee that the shortfall in fees will always be met.

We can help you understand your options, their potential impact on state benefits, and their potential impact on your estate. To arrange a meeting to discuss your needs go to the Contact Us page.

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