Ensuring care for the rest of a client’s life
Mrs B is an 82-year-old widow who sold her home and moved into a residential care home following the death of her husband. She has no children or close relatives and, although her health is relatively good, she has decided to live in a residential care setting to ensure her personal security and enjoy social interaction.
At the time she moved into a care home she also realised certain investments that had been bequeathed to her by her husband. This resulted in a tax liability of which she was unaware and we became involved only after she had received a letter from HM Revenue & Customs which caused her a great deal of anxiety.
Mrs B appointed us as her Agent, enabling us to deal with HM Revenue & Customs directly. We prepared and submitted the outstanding tax return, explained Mrs B’s position and negotiated a reduction in the penalty charge and interest which HM Revenue & Customs had notified to Mrs B. We have also ensured that Mrs B will not, routinely, be required to submit any further tax returns.
Whilst looking into Mrs B’s financial position we recognised that there was a likelihood that her capital would be exhausted during her lifetime, making her financially dependent upon the local authority to fund her care – with the possibility of her losing control over both the setting and the standard of the care she received.
Mrs B was obviously very concerned about this. We therefore looked into the feasibility of using some of her capital to purchase an Immediate Care Fees Plan. This would guarantee a regular monthly payment to her care provider. We obtained quotations from all possible providers and negotiated a reduction of over £5,000 for her.
We then used cashflow modelling to analyse the best way forward: our analysis showed that, although the cost of the plan was significant, it would effectively guarantee that Mrs B’s money would not run out during her lifetime, enabling her to retain a far higher degree of control over the standard of care she receives and the setting in which it is received.
In the relatively unlikely event that she passes away in the near future, her estate would lose money. But Mrs B now has peace of mind from knowing that, no matter how long she lives, her money will not run out.
Care Fees Plan give care homes additional security, and we obtained a commitment from her existing provider that her fees will never increase above the amount available from the care fees plan and her income.
If Mrs B chooses to move to a new home the monthly payment from the plan will be diverted to her new care provider. If she ultimately becomes eligible for state funding towards her care costs, and the monthly amount generated by the care fees plan is higher than required, the surplus amount will be repaid to her.