Background

Stephen contacted us regarding his father David (78), who had recently entered a care home.

Having established that David's stay at the care home would be permanent, Stephen required advice from PMN in respect of the following:

• To evaluate the various options available to David in meeting his care fee requirements over the longer term.
• To understand the level of state assistance available to David in the funding of his care.
• To consider the impact (of funding the care fees) on David's legacy to Stephen.

PMN Approach

• We wanted to ensure that all of the State Benefits to which David is entitled to were being claimed.
• We reviewed David's current income and capital position which enabled us to identify the shortfall in meeting the annual care fee requirement.
• We used cash flow modelling to illustrate the impact of funding the care fees from capital.
• We considered the option of structuring David's money to produce the required income, and also the associated risks of doing so.
• We obtained quotations for an 'immediate need care fee payment plan' to assess the viability of this option.

Recommendations

• PMN recommended that a care assessment be undertaken by David’s Local Authority. This identified a number of tax free, non-means tested benefits to which David was entitled to.
• Having considered the options available to David, an immediate need care fee payment plan was selected to cover the shortfall.
• It was agreed that a level of escalation would be selected to provide some protection against increasing care costs.
• The annuity will continue to pay David's registered care home provider, the selected tax free amount for the remainder of his life.
• David's remaining assets were then structured to provide him with sufficient liquidity and maximum tax efficiency. 

Review Process

• Having selected a level of escalation at outset, Stephen had provided a degree of certainty in meeting his father’s care fee requirements over the longer term.
• In the event that the care fees should increase by greater than the amount of escalation provided by the annuity, then the position may well need to be reviewed. 

This case study is an example only, and financial advice should always be sought before making any investment decisions.