Options/best approach (least worst) re elder care
Discussion
Afternoon all, I wonder if anyone's got some experience to share, or would contribute some thoughts?
In summary, Mrs BFB's mum has been infirm for a couple of years. She had some savings after the death of her husband, and these were used to keep her in her own home, at her request (as best it was understood - dementia is in its middle stages) up to now. The saving are now used up and she has just moved to a home, where she's comfortable & happy. She has an asset, her house (maybe £375K) and a smallish pension. She's only just gone in, and she's in the 12-week property disregard period, which allows some time for planning.
The question is, given her care costs are c80K pa, payable until her assets drop below the 20k-odd mark, what's the best way to fund her continuing care? The issue of any legacy is very much secondary, but there was a desire from them to pass something on from mum and dad to their children as best they could. She's clearly life-limited, but the exact prognosis is unknown.
Broadly, I think the options are pretty simple (my wife has LPA with her brother)?
Sell, invest for return and draw down until she reaches threshold.
Look at annuity? Brother's idea, has spoken to a specialist, but I can't see how it would work - surely it'd get nowhere near the level needed to fund care net of the pension?
Allow the Local Auth to fund care and apply a charge on the property, and settle after her demise (they don't know what, if any, is the applicable rate of interest as yes)
Welcome thoughts from anyone who has been there or has some thoughts about how to move forward. They have a few weeks to consider this.
In summary, Mrs BFB's mum has been infirm for a couple of years. She had some savings after the death of her husband, and these were used to keep her in her own home, at her request (as best it was understood - dementia is in its middle stages) up to now. The saving are now used up and she has just moved to a home, where she's comfortable & happy. She has an asset, her house (maybe £375K) and a smallish pension. She's only just gone in, and she's in the 12-week property disregard period, which allows some time for planning.
The question is, given her care costs are c80K pa, payable until her assets drop below the 20k-odd mark, what's the best way to fund her continuing care? The issue of any legacy is very much secondary, but there was a desire from them to pass something on from mum and dad to their children as best they could. She's clearly life-limited, but the exact prognosis is unknown.
Broadly, I think the options are pretty simple (my wife has LPA with her brother)?
Sell, invest for return and draw down until she reaches threshold.
Look at annuity? Brother's idea, has spoken to a specialist, but I can't see how it would work - surely it'd get nowhere near the level needed to fund care net of the pension?
Allow the Local Auth to fund care and apply a charge on the property, and settle after her demise (they don't know what, if any, is the applicable rate of interest as yes)
Welcome thoughts from anyone who has been there or has some thoughts about how to move forward. They have a few weeks to consider this.
Firstly sorry to hear the circumstances.
I had to act as Attorney for my Aunt once arranged including dealing then with debt collectors , selling her house , dealing with the council and by then the care home etc.
She was in receipt of a modest pension which after speaking with Advisors I managed to obtain additional Pension credit plus an attendance allowance - once the house was sold the former stopped.
This all had to be done starting around May 2020 so not fun with covid and lockdowns etc and took the best part of 12 months to sort.
I did go with an immediate needs annuity which in effect pays around 85% of her care home fees for as long as she lives and I am free to change homes if I need. The money is paid direct to the care home monthly and is tax free.
The money used to purchase is therefore removed from her assets so providing she lives for more than 3 years the tax saved starts to make the purchase seem better value - they are expensive but obviously as Attorney my role is to ensure she is happy and comfortable with no need to worry.
The balance per month is able to be paid from her funds left post the house sale.
I could have used solely the house proceeds but that has a limit so decided after advice from my advisor to go the route I went.
My wife is also a joint attorney so we discussed the options as well as discussing with my mother who is my aunts twin but thus far am happy we made the right call.
I won’t say what I think about having to sell her house to pay for her care but the home is really nice and they seem to really care and more importantly she is safe and happy.
Best of luck with what you decide.
I had to act as Attorney for my Aunt once arranged including dealing then with debt collectors , selling her house , dealing with the council and by then the care home etc.
She was in receipt of a modest pension which after speaking with Advisors I managed to obtain additional Pension credit plus an attendance allowance - once the house was sold the former stopped.
This all had to be done starting around May 2020 so not fun with covid and lockdowns etc and took the best part of 12 months to sort.
I did go with an immediate needs annuity which in effect pays around 85% of her care home fees for as long as she lives and I am free to change homes if I need. The money is paid direct to the care home monthly and is tax free.
The money used to purchase is therefore removed from her assets so providing she lives for more than 3 years the tax saved starts to make the purchase seem better value - they are expensive but obviously as Attorney my role is to ensure she is happy and comfortable with no need to worry.
The balance per month is able to be paid from her funds left post the house sale.
I could have used solely the house proceeds but that has a limit so decided after advice from my advisor to go the route I went.
My wife is also a joint attorney so we discussed the options as well as discussing with my mother who is my aunts twin but thus far am happy we made the right call.
I won’t say what I think about having to sell her house to pay for her care but the home is really nice and they seem to really care and more importantly she is safe and happy.
Best of luck with what you decide.
My mother was in a care home for two years before she died and my mother in law moved into one six months ago, so I have some experience.
You have quoted the three broad options -
- Sell to fund care. Investing over the shortish term the money will be needed is a bit risky, so more likely just saving with interest.
- Sell and buy an annuity. Yes they are expensive but can make sense if the person in care lives a long time; but most don’t - I forget what the average stay is but it is around two or three years at most.
- Keep the property and let the local authority put a charge on it and pay. This option has two benefits -
You can rent the property out and generate an income from it, and do so in a safer way than investing the money, plus hopefully the property might increase in value.
But more importantly, the rate the local authority pays the care home is the local authority rate and not the higher self-funding rate that care homes charge, even though she is effectively self-funding, so you are saving money even after paying interest and the set up costs.
The interest rates the local authority charge are regulated and low and not penal, but you do have to pay their legal costs to set the scheme up (a few thousand) so it is usually only worth doing if the property has sufficient value to cover a number of years fees.
There is a potential that they might be entitled to continuing care, but it is very hard to get in England and there are legal firms who will assist with any appeals if you think that route is possible -
www.nhs.uk/conditions/social-care-and-support-guid...
I would suggest if you haven’t already done so to approach the local authority for a care needs assessment.
Also if she isn’t receiving Attendance Allowance put in an application now.
You have quoted the three broad options -
- Sell to fund care. Investing over the shortish term the money will be needed is a bit risky, so more likely just saving with interest.
- Sell and buy an annuity. Yes they are expensive but can make sense if the person in care lives a long time; but most don’t - I forget what the average stay is but it is around two or three years at most.
- Keep the property and let the local authority put a charge on it and pay. This option has two benefits -
You can rent the property out and generate an income from it, and do so in a safer way than investing the money, plus hopefully the property might increase in value.
But more importantly, the rate the local authority pays the care home is the local authority rate and not the higher self-funding rate that care homes charge, even though she is effectively self-funding, so you are saving money even after paying interest and the set up costs.
The interest rates the local authority charge are regulated and low and not penal, but you do have to pay their legal costs to set the scheme up (a few thousand) so it is usually only worth doing if the property has sufficient value to cover a number of years fees.
There is a potential that they might be entitled to continuing care, but it is very hard to get in England and there are legal firms who will assist with any appeals if you think that route is possible -
www.nhs.uk/conditions/social-care-and-support-guid...
I would suggest if you haven’t already done so to approach the local authority for a care needs assessment.
Also if she isn’t receiving Attendance Allowance put in an application now.
We sold the house and put most of the money into bonds.
Rent would not cover the home. Not going to get anywhere near it.
Annuity would have barely covered the cheaper home and eaten all the money.
We took the view that the person's quality of life in a nicer home in the short term would be more important that being able to afford a 'slightly better than council' home long term. When they're going downhill, you can, bluntly expect they are not going to appreciate the finer points in a few year's time.
In the event, she died after about two years so the annuity would have been very poor value.
Rent would not cover the home. Not going to get anywhere near it.
Annuity would have barely covered the cheaper home and eaten all the money.
We took the view that the person's quality of life in a nicer home in the short term would be more important that being able to afford a 'slightly better than council' home long term. When they're going downhill, you can, bluntly expect they are not going to appreciate the finer points in a few year's time.
In the event, she died after about two years so the annuity would have been very poor value.
We went down the Local Authority route with my Dad.
My Sister had LPA so I'm not sure of the full details & dates but he went into the care home in late 2011 - maybe early 2012 by the time he was settled in his permanent residence.
The house was sold for around £135-140k and when he died in January 2016 there was around half of that left after the council had taken their share and the other associated expenses were paid.
Clearly, this cost significantly less than £80k per year and while this could well be due to the rate that the LA pays for the care, location and the standard of the home could also be factors. It was also a while ago now, I guess.
The home itself was ok and he seemed happy enough there, as far as you can tell with dementia - at least he was once he'd got past the stage of just wanting to go home (to his home) which lasted for about 6 months.
Dementia SUCKS!
My Sister had LPA so I'm not sure of the full details & dates but he went into the care home in late 2011 - maybe early 2012 by the time he was settled in his permanent residence.
The house was sold for around £135-140k and when he died in January 2016 there was around half of that left after the council had taken their share and the other associated expenses were paid.
Clearly, this cost significantly less than £80k per year and while this could well be due to the rate that the LA pays for the care, location and the standard of the home could also be factors. It was also a while ago now, I guess.
The home itself was ok and he seemed happy enough there, as far as you can tell with dementia - at least he was once he'd got past the stage of just wanting to go home (to his home) which lasted for about 6 months.
Dementia SUCKS!
Worth me adding to my previous reply give various excellent ideas of allowing the local authority to take a charge / rent out the house.
This option wasn’t open to me as Attorney given my Aunts house hadn’t been lived in for over a decade and she had been staying with friends.
With water damage etc the house was literally uninhabitable to add to the workload of sorting her life out. The authority were sympathetic but not interested in taking a charge unless I paid for the renovations / repairs first.
She would buy things and go back to her house and dump them still in the bags - think Hoarders on tv covers the sight we saw.
Rather than derail the thread suffice to say it could have been a decent option but ultimately going down the sale route / annuity purchase made sense for me / her.
This option wasn’t open to me as Attorney given my Aunts house hadn’t been lived in for over a decade and she had been staying with friends.
With water damage etc the house was literally uninhabitable to add to the workload of sorting her life out. The authority were sympathetic but not interested in taking a charge unless I paid for the renovations / repairs first.
She would buy things and go back to her house and dump them still in the bags - think Hoarders on tv covers the sight we saw.
Rather than derail the thread suffice to say it could have been a decent option but ultimately going down the sale route / annuity purchase made sense for me / her.
I’d let the council put a charge on the property and decide whether or not you want rent it out in the meantime having considered the tax implications.
Whilst this sounds cruel you don’t want someone to last long in a care home with dementia it is a horrible condition. We’re going through it ourselves with FIL who is incontinent and fiddling with a baby’s toy of blocks that go round metal hoops. 7yrs ago he’s be taking engines and gearboxes apart and doing all his own maintenance. Sadly he is in the peak of physical condition at 85 and used to go swimming every day into his late 70s. Pneumonia nearly took him earlier this year but hospital revived him despite him fighting to pull all the tubes out etc. There’s a directive in place he’s not to go into hospital again along with a DNR.
Can’t help on finance other than make sure you receive everything you’re entitled to. Social Services should help. In my case I own the house so it is disregarded, plus MIL still lives in it.
Whilst this sounds cruel you don’t want someone to last long in a care home with dementia it is a horrible condition. We’re going through it ourselves with FIL who is incontinent and fiddling with a baby’s toy of blocks that go round metal hoops. 7yrs ago he’s be taking engines and gearboxes apart and doing all his own maintenance. Sadly he is in the peak of physical condition at 85 and used to go swimming every day into his late 70s. Pneumonia nearly took him earlier this year but hospital revived him despite him fighting to pull all the tubes out etc. There’s a directive in place he’s not to go into hospital again along with a DNR.
Can’t help on finance other than make sure you receive everything you’re entitled to. Social Services should help. In my case I own the house so it is disregarded, plus MIL still lives in it.
My wife is going to find out more about the deferred loan terms (anyone know if this is a national scheme or whether authorities can set their own terms?), everything else in terms of continuing care assessment etc is underway. The ability to at least defray some of the costs by renting her house may be the best option.
My wife sends her thanks - a bit difficult today as she got her copy of the assessment, which puts down in black and white what intuitively she knew about her mum, but still difficult to see it in such stark terms.
My wife sends her thanks - a bit difficult today as she got her copy of the assessment, which puts down in black and white what intuitively she knew about her mum, but still difficult to see it in such stark terms.
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