The process of finding residential or nursing care will run much more smoothly if you plan ahead, as Kate Norris advises.
There are more than 400,000 people in the UK living in residential and nursing care. The cost of a care home depends on where you live – the average weekly cost in the South West for a residential home is £698 and £800 for a nursing home. If your aging parent or family member is still living independently, then it is wise to fully research the options for future care while they can still make decisions.
Planning and putting the paperwork in order now will go a long way towards easing the process and will allow you to make early provision for the costs if a move becomes necessary. Here’s a list of things for your consideration before making a decision.
Prepare the paperwork
Make sure you are aware of all your relative’s financial assets and property interests, and have easy access to the paperwork relating to them.
Prepare Lasting Powers of Attorney
It is only possible to prepare a Lasting Power of Attorney while the person still has mental capacity to give their instructions. If the person has lost mental capacity, then you will need to apply to the Court of Protection to appoint a Deputy to manage a person’s property and financial affairs. This process is much more complex, costly and takes longer to organise. This also means they have lost the opportunity to choose who they would wish to manage their finances on their behalf.
In the past, there was one type of Power of Attorney called an Enduring Power of Attorney dealing solely with property and finances. This document was replaced in October 2007 with Lasting Powers of Attorney of which there are two types – one
for property and finances, and another for health and welfare. Increasingly Health and Welfare Lasting Powers of Attorney are seen as just as important as, once a person has lost capacity, an Attorney has the legal right to be involved in any best interest meetings and decisions relating to the donor’s care and medical treatment.
It is important to note that this type of Lasting Power of Attorney can only be used when the donor has lost the capacity to make these decisions for themselves. Whereas a Lasting Power of Attorney for Property and Affairs can be used whilst the donor retains mental capacity upon their instructions but for example have become physically frail.
You can appoint one or more attorneys to act either jointly or jointly and severally. You also have the option to appoint replacement attorneys if those nominated aren’t able to act due to loss of capacity, bankruptcy or death.
Before a Lasting Power of Attorney can be used it must to be registered with the Office of the Public Guardian which can take as long as two months. We therefore recommend the documents are registered straight away so they are ready to use as soon as required. This will save further delay in payment of care fees.
Safeguard some of your assets
If your parent or elderly relative has capital in excess of £23,250 they will be expected to pay for their care. However, there are disregards which can be applied to certain assets in some circumstances such as the value of the property if the spouse continues to live there.
If the value of their assets are below this threshold and following a needs assessment they are assessed as having eligible needs that can only be met in a care home they will be entitled to financial support from the Local Authority. The Care Act 2014 introduced some significant changes relating to the financing of care. From April 2020, the amount a person pays for the care element of their care fees will be limited to £72,000. This figure also relates to the cost of care received at home before going into care so keep careful track of the care costs at every stage.
If you leave all of your assets to your spouse then, if, after your death, they become resident in a nursing or residential home then all of your combined assets will be included in the financial assessment of their assets. This means that all of your combined assets could, potentially, be used to pay for their care.
As an alternative, you protect and ‘ring fence’ your assets under your will. In particular, rather than leaving all of your assets to your spouse outright you can direct that they are to be held on trust for the benefit of your spouse. You can, for example, leave your assets on a ‘life interest’ trust. Under this type of trust your spouse will have an indefeasible right to occupy any trust property and receive any income from trust assets. After their death, the trust assets are divided between the beneficiaries that you have specified.
By way of example, if the first spouse to die left their one half share of the matrimonial home, along with their savings, on a life interest trust then the survivor would be entitled to live in the property for the rest of their life. However, if the survivor could no longer remain in the property and it was sold, then only one half of the sale proceeds would be included in any assessment for nursing or residential care fees. The other half would be held under the terms of the will trust and protected for the beneficiaries of the trust.
It is also a good idea to speak to a specialist financial adviser about the investment of funds to ensure they last as long as possible to fund care fees. For example the purchase of a long term care annuity can guarantee the payment of care home fees for the remainder of someone’s life. These care plans are quite costly but the benefit is that there is a guaranteed income to pay ongoing fees.
Mogers Drewett can assist by:
- Preparing Lasting Powers of Attorney
- Dealing with the registration of the documents with the Office of Public Guardian
- Making the necessary assessment as to the person’s mental capacity, and signing the certificate if the person has sufficient mental capacity.
- Organising the registration of Enduring Powers of Attorney – these Powers of Attorney were replaced by Lasting Powers of Attorney in October 2007 but are still valid. The Attorneys have a duty to register the document with the Office of the Public Guardian when the donor begins to lose mental capacity.
- Making an application to the Court of Protection for the appointment of a Deputy if no Power of Attorney exists.
- Advice about Continuing Health Care – if a family member moves into a nursing home they should be assessed for Funded Nursing Care (FNC) and Continuing Health Care (CHC), whereby the NHS agrees to pay £112 direct towards care fees if eligible for FNC and if they meet the criteria for CHC their care fees are paid in line with the fees set by the NHS. Mogers Drewett can deal with the application, assessment procedure and the appeals process.