When it comes to providing for Long Term Care, the approach of "I'll rely on the State" is a big mistake.
- Date: 01/06/2017
Despite the Dilnot report in 2011 and recent manifesto pledges by the main parties, few major changes are likely to be forthcoming. So now more than ever, people need to take charge of their own plans.
Well-meaning promises of future financial help from children are always genuine, but often unachievable - especially where annual Nursing Care bills typically exceed £50,000 per annum. Of course, there is also a temptation for those with assets to help loved ones, especially when it comes to getting children/grandchildren onto the housing ladder. Our advice would be to be careful about such acts of kindness, as when it's gone it's unlikely to come back, even in your hour of need.
The length of time someone stays in a Care home can vary widely, but assuming a three year stay in a Nursing Care Home at a cost of £1,000 per week, this equates to over £150,000. Many people are now living longer than ever, which can decimate assets that ideally would have passed to your chosen beneficiaries.
But, life is often not ideal and this is the position in which we find ourselves. Accepting the situation (albeit reluctantly) is a good starting point, rather than getting angry with the State or wishing you were no longer here, draining away your families inheritance - just ask families who have lost loved ones too early and see which option they would prefer.
Over the years, there have been ways to reduce your assets to "rely on the State", but be careful what you wish for, especially if you want to retain control of your future and where Care is administered. The State "safety net" should be seen as a last resort and planning for a longer life and understanding that this is likely to take the form of different stages, would be a sensible move.
So, what's the solution?
There’s no single solution and individual circumstances must be taken into account, but our advice would initially not to be too transfixed with the potential problem. The reality is that you may never have to go into Care.
Making sure your assets are well placed and working well for you is a sensible first move as well as claiming what is due from the State (i.e. Attendance Allowance etc) and making a Will, sorting out your Powers of Attorney etc
More bespoke advice starts at the point of Care. Depending on your health and ability to complete various activities of daily living, you may be able to cover the shortfall by buying a guaranteed income at much better rates than when all is well. Many panic at this stage, but this is the time that you really need to seek a qualified adviser.
The stark reality is that if you want to keep control of your future care costs, assets will need to be sold, which will often involve selling property. Releasing equity from property is also now a viable option. If the circumstances are right, this market is well regulated and much fairer than in years gone by.
Sensible future planning and an acceptance of reality (rather than thinking that there’s some magic wand can be waved) can certainly help to ease the pain.
Whatever happens on the 8th June, this political “hot potato” is unlikely to cool down for the foreseeable future, so instead of waiting for the State safety net to unravel, we would recommend a more proactive and prudent approach to this worry for so many.
Opinions, interpretations and conclusions expressed in this document represent our judgement as of this date and are subject to change. Furthermore, the content is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or a solicitation to buy or sell any securities or to adopt any investment strategy.
Thomas Miller Investment is the trading name of the businesses in the Thomas Miller Investment Group. This note has been issued by Thomas Miller Wealth Management Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Register Number 594155) and is a company registered in England, number 08284862