Case Studies
Charlotte Geoffrey (Bath, Somerset)
Charlotte was already in care, and her house had already been
sold, when her family contacted us to discuss the funding of
her care. Charlotte had dementia and was receiving nursing
care. However, there was nothing medically to suggest that
she would not still live a good many years.
Charlotte had reasonable capital available due to her house
being sold combined with her savings, but not enough for investment
and savings income to pay for care. However, her capital was
above the means test threshold and she would therefore have
to self-fund her care.
Once her state and other pensions were
taken into account, there would be a substantial care
fee shortfall.
As Charlotte was receiving nursing care and not just personal
care, she received the Registered
Nursing Care Contribution,
and also qualified for Attendance
Allowance at the higher rate,
which helped a little.
An Enduring Power of
Attorney had already been registered,
as she had lost mental capacity.
Charlotte’s family wanted funding put in place which
would pay for care over the long term and preserve as much
of her estate as possible.
We gave the family a number of options,
and they decided on a Care Annuity covering
the majority of the care fee shortfall, but with
some conservative income paying
investments contributing also, so that less money
was paid into the annuity.
The end result was that the Care
Annuity paid the
majority of Charlotte’s
care fees and the rest of her estate was
protected from severe depletion, compared to savings
and investments gradually being
surrendered to pay her care fees.
If Charlotte’s care needs and
resultant fees increase substantially, utilising
some of her remaining capital for
a top-up Care Annuity and other options
would be considered at that time.
Joan Leslie (Hatfield Peverel, Essex)
Joan had been in residential nursing care for a couple of
years when we were asked by her son and daughter-in-law to
advise on the funding arrangements which had been put in place
by a bank adviser, and about which they had become concerned.
Joan had dementia and was receiving nursing care. However,
there was nothing medically to suggest that she would not still
live a good many years.
Joan had reasonable capital available due to her house being
sold combined with her savings, but not enough for investment
and savings income to pay for care. However, her capital was
above the means test threshold and she would therefore have
to self-fund her care.
Once her state and other pensions were
taken into account, there would be a substantial care
fee shortfall.
As Joan was receiving nursing care and not just personal care,
she received the Registered
Nursing Care Contribution, and
also qualified for Attendance
Allowance at the higher rate,
which helped a little.
An Enduring Power of
Attorney had already been registered
as she had begun to lose mental capacity.
Joan’s son and daughter-in-law had wanted funding put
in place which would pay for care over the long term and preserve
as much of her estate as possible.
The bank adviser recommended and arranged for enough money
to pay for the care fee shortfall for five years to be placed
on deposit, with the balance being placed in unprotected stock
market-linked investments.
If Joan only lived a short while, leaving money on deposit
would have been the best course of action. However, there was
nothing medical to suggest that Joan was going not going to
live for many more years. After two years, with funds depleting
from paying care fees and investments reducing in value, the
family were worried and contacted us.
The adviser had not explained that
his recommendations would leave funds mostly or fully
extinguished if Joan lived a reasonable
amount of time, and had not mentioned the
option of a Care Annuity.
We recommended and arranged a Care
Annuity with the most competitive provider, with
the balance
of her savings left on deposit and
in investments to be accessed if needed
and eventually to pass to her children. We also helped
with a claim against the bank,
whom to-date have made an offer of compensation
which has been rejected by the family, and against
whom further action is
being taken.
The end result was that the Care
Annuity paid the majority of Joan’s
care fees and the rest of her estate was
protected from severe depletion, compared to savings
and investments gradually being
surrendered to pay her care fees.
If Joan’s care needs and resultant
fees increase substantially, utilising some of her
remaining capital for a top-up Care
Annuity and other options would be considered at that time.
William Andrews (Leyton, London)
This was a slightly unusual case.
Mr & Mrs Andrews were advanced in years and had met with
their solicitor to update their will. The solicitor realised
that they were unable to manage their relatively considerable
savings and investments and recommended that they meet with
us to advise on and manage their funds. However, Mr Andrews
was taken ill during this process, went into hospital and from
there to a care home. Although it was discovered that Mr Andrews
had early dementia combined with other medical problems, there
was nothing medically to suggest that he could not still live
a good many years.
Mr Andrews had reasonable capital available due to substantial
investments and savings, but not enough for investment and
savings income to pay for care. However, his capital was above
the means test threshold and he would therefore have to self-fund
his care.
Once his state and other pensions were
taken into account, there would be a substantial care
fee shortfall.
The local authority arranged the care and funded it for three
months on an interim basis – they would pay for care
and bill Mrs Andrews. They refused extending this facility
beyond three months. When this arrangement expired, the care
home contracted with Mrs Andrews directly and increased the
fees by 40% (local authorities can usually purchase care at
discounted rates).
As Mr Andrews was receiving nursing care and not just personal
care, he received the Registered
Nursing Care Contribution,
and he also qualified for Attendance
Allowance at the higher
rate, which helped a little.
It became clear that Mr Andrews had begun to lose mental
capacity early on, and his Enduring
Power of Attorney was therefore
registered with the Court of Protection, at our recommendation.
Mrs Andrews wanted the funding to be as simple as possible,
as she was the one dealing with it and was frail herself, with
as much of the estate preserved as possible from depletion
to pay care fees.
We recommended and arranged a Care
Annuity to pay the care
fee shortfall, with the rest of Mr Andrews’ savings
and investments accessible if needed and
eventually to pass to
his children.
The end result was that the Care
Annuity paid the majority of Mr Andrews’ care
fees and the rest of his estate was protected from
severe
depletion, compared to savings and investments
gradually being surrendered to pay his care fees.
If Mr Andrew’s care needs and
resultant fees increase substantially, utilising
some of his remaining capital for
a top-up Care Annuity and other options
would be considered at that time.
Esther Goldstein (Hampstead, London)
Esther is a special lady - she survived the horrors of a Nazi
concentration camp. Esther’s daughters contacted us to
advise on her care funding arrangements.
Esther had come to the stage where she didn’t need nursing
care yet, but did need someone to help her with many of the
general activities of daily life.
Esther had reasonable capital available, due to her house
value combined with her savings, but not enough for investment
and savings income to pay for care. However, her capital was
above the means test threshold and she would therefore have
to self-fund her care.
Once her state and other pensions were
taken into account, there would be a substantial care
fee shortfall.
As there was no nursing care needed at this stage, there would
be no Registered Nursing
Care Contribution to help, but she
did qualify for the higher rate of Attendance
Allowance, which
helped a little.
Her daughters had an Enduring
Power of Attorney, which was
had registered at our recommendation as
she had begun to lose
mental capacity – in
part due to the torment she endured in
early life.
Although they did not want Esther’s estate totally depleted,
her daughters wanted her to have the very best care in the
latter stages of her life, even to the degree that their inheritance
would be reduced beyond the norm for such a case.
We recommended that a Care
Annuity make up
the care fee shortfall, with the rest of the capital,
once the house sale was completed,
placed on deposit and in safe investments
to be accessed if and when needed and the residual
estate eventually passed to
her children.
Esther had available savings, but not enough to fully pay
for the care annuity. Her daughters put Esther’s home
up for sale, and one of them remortgaged her own house to make
up the shortfall in the annuity premium, to be repaid once
the home was sold.
An unusual element to this case was
that it was apparent to us from experience that the
annuity rate offered by even the
most competitive Care Annuity Provider was not enough
for Esther's age and condition. We renegotiated
with the annuity provider, who increased their rate
by a couple of percent, but still not enough in our
experience. It became clear that the GP and/or Care
Home had not given comprehensive enough information
on Esther's medical condition and degree of dependence
to the annuity provider (despite our guidance to
begin with). We therefore had both GP and Care Home
re-complete
the medical and care information (we sat with the
care home manager and one of Ether's daughters sat
with the GP when they completed) and a substantial
increase in the rate resulted.
The end result was that the Care
Annuity paid the majority of Esther’s
care fees and the rest of her estate was
protected from severe depletion, compared to savings
and investments gradually being
surrendered to pay her care fees.
If Esther’s care needs and resultant
fees increase substantially, utilising some of her
remaining capital for a top-up Care
Annuity and other options would be considered at that time.
Mrs Nicholas (East Anglia)
Mrs Nicholas had a serious stroke and was due to be sent to
a nursing home from hospital. Her prognosis was not good, and
eventually a life expectancy of one to two years was given.
However, she had been turned down for Continuing
Care (fully
funded nursing care) by the NHS.
Mrs Nicholas had reasonable capital available due to her house
value combined with her savings, but not enough for investment
and savings income to pay for care. However, her capital was
above the means test threshold and she would therefore have
to self-fund her care.
Once her state and other pensions were
taken into account, there would be a substantial care
fee shortfall.
She received Attendance
Allowance at the higher rate and would
be eligible for the Registered
Nursing Care Contribution when
becoming resident of the nursing home.
She had lost mental capacity due
to the stroke, but had not donated an Enduring
or Lasting Power of Attorney whilst she had capacity
and Deputyship was
therefore applied for to the Court of Protection.
Her family wished good quality nursing care, which was very
expensive, to be adequately paid for. Although they did not
want the estate completely depleted, this was secondary.
We recommended that an appeal be made
against the NHS’ refusal
of Continuing Care, including
legal action if the appeal was unsuccessful.
As a back-up, we also applied to Care
Annuity providers to see
what rate they would pay.
The best rate offered from the most
competitive
Care Annuity provider was close
to 30% per annum against the purchase price, meaning
the break-even point would be about 3 years.
However, after discussion with her
family, it was felt that, as Mrs Nicholas would probably
not live longer than one to
two years, in this case protecting her
estate from longer term depletion with a Care
Annuity would not be needed and may be more
expensive than surrendering funds from
her savings and investments, which was the strategy
put in place.
The appeal was successful and the NHS agreed to fully fund
Mrs Nicholas’ care. However, sadly, Mrs Nicholas did
pass away within a year.
Comment
Although we can never be sure of life
expectancy - people with short life expectancy have
often gone on to live for many more years than expected
and those with longer life expectancy have often
lived shorter lives - Care Annuities are designed,
in part, to protect the estates of those who do not
have enough capital for savings and investment income to
pay for care (which is the majority) and who go on
to live longer lives. Life expectancy at outset,
although
not guaranteed, is usually a major factor in deciding
which route to take for those self-funding their
care.
If life expectancy is at least the break-even point
for a Care Annuity (the point at which all of the
premium has been repaid in care fee contributions),
then
a Care Annuity is usually a strong consideration.
If life expectancy is below the break-even point,
then gradual depletion of savings and investments
is usually the stronger consideration. In part, a
Care
Annuity
should
be
considered as insurance against a longer life and
severe estate depletion. As with insurance, it may
not be needed, but gives peace of mind, albeit at
a price.
28/12/08 Revision [top]
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