Other additional options can usually be selected, for instance, capital protection or the use of a deferred option. These are all part of the tool kit available to advisers to offer some insurance against the risk of 'earlier death’ before the perceived value of the annuity is achieved.
In reality, a significant advantage of an immediate needs annuity is the peace of mind it gives to clients, their family or attorneys, that the insured person will not outlive their funds
Property assets may well play a part in the funding of long-term care, depending on what other assets are available. With good advice, it is not always necessary to sell the family home. In some cases it is disregarded from the means test when being financially assessed to pay for care.
The most frequent use of this disregard is in relation to married couples. If the spouse who does not need care remains in the home then the value of the home is not included in the means test.
The statement that no one should need to sell their home to pay for care is an emotive one.
Local authorities for many years have offered a deferred-payment arrangement to pay for care costs through a charge on property for those that meet the eligibility criteria.
It is also interesting that equity release providers are introducing medically underwritten and domiciliary care products.
Advisers should be aware of the state benefits, such as the attendance allowance that a client may be entitled to, as well as the possible impact that advice and recommendations may have on someone’s eligibility to claim any means-tested benefits.
Deliberate deprivation
Where a client potentially tries to avoid paying care fees by giving away or disposing of assets, then claiming for local authority funding, they can be assessed as if they still own the assets.
The rules that cover deliberate deprivation cover both income and capital and are not connected to the rules for inheritance tax.
The local authority will investigate where assets have gone and there is no legal time limit on how far back they can go. The burden of proof is on the local authority to show deliberate deprivation was the reason for the transfer of assets.
If an individual has deliberately deprived themselves of capital, they will be assessed as having the capital they have disposed of. Therefore the guidance refers to notional capital.
When this is added to any remaining assets, if the total exceeds £23,500 in England, then the individual will be expected to pay for the full costs of their care.
What will be left?
