Later Life: 5 Financial Things to think about

Getting your finances in line is critical for ensuring you are financially secure and can help your family and friends when they are supporting you in later life. Whether you have just received a diagnosis or are simply looking to tidy up your financial affairs for the future there are several steps you can take.

Here we will cover five financial things to think about:

  1. Arranging a Power of Attorney
  2. Funding Care Costs
  3. Deprivation of Assets / Gifts with Reservation of Benefit (GWRB)
  4. Applying for an Attendance Allowance
  5. Applying for a Council Tax Discount or Exemption

1) Arranging a Power of Attorney

A Lasting Power of Attorney (LPA) is a legal document that enables you to appoint one or more people (known as attorneys) to assist you with making life decisions, or to make life decisions on your behalf. An LPA gives you more control over what happens if you have an accident or an illness that affects your ability to make your own decisions.

There are two main types of LPA:

  • Property and Financial Affairs – used to give attorneys the power to make decisions about money and property, including managing bank accounts, paying bills, claiming benefits and pensions and selling your home
  • Health and Welfare – used to give attorneys the power to make decisions about things like your daily routine, your medical care and whether you should enter a care home

An LPA can be arranged directly with the Office of the Public Guardian, but it is common for people to seek assistance from a Solicitor. There are charges and fees associated with setting up LPAs, but they are valuable documents and will allow your attorneys to support you as soon as you need them. An LPA can only be set up whilst you have ‘mental capacity’ and therefore should be set up as soon as possible.

2) Funding Care Costs

Paying for care costs in later life is rarely a main objective during your career and when you are raising a family. As you approach retirement and may take on caring responsibilities for your own parents, this area can come into sharper focus.

Social care generally requires an individual, or their family, to meet some or all the costs of care. With average weekly residential care home fees starting from £800 per week, and from £1,078 for a nursing home, the costs can rapidly mount up.

Many people do not have easily accessible wealth, outside of their home, which could be used to fund such care. The local authority may help fund a part of the cost, but this depends on the authority, the level of need and the persons available ‘wealth pot’.

Options available include funding the weekly cost from savings or investments or using the equity built up within the home to again either fund on an ongoing basis or to purchase an annuity – a guaranteed income payment which is bought from a one-off premium and provides an income directly to the care home.

Equity may be released from the home either through the sale of the property or through equity release and the most suitable options will differ depending on the circumstances of those going into care, and those who may be remaining in the house after this.

3) Deprivation of Assets / Gifts with Reservation of Benefit (GWRB)

Deprivation of Assets and GWRB are two sets of rules that individuals and families commonly fall foul of when they come to apply for support with care costs.

Broadly, Deprivation of Assets rules prevents you from giving away your valuable assets in an attempt to reduce the funds you have to pay for your own care. GWRB rules prevent you from giving away assets and then continuing to use the assets for your own benefit without paying a market rate for the benefit. An example would be someone giving their home to their children and then continuing to live in the property without paying market rent.

These rules can have serious repercussions, so it is imperative that you take advice before choosing to gift assets.

4) Applying for an Attendance Allowance

Attendance Allowance is a State benefit for people over State Pension Age who require assistance to look after themselves. It is not means-tested so anyone can apply for support. It is available at two different rates and how much you get depends on the level of care that is required.

Attendance Allowance is one of a number of “gateway” benefits that entitle you to other benefits and discounts, including the council tax discount/exemption outlined below. The application process for Attendance Allowance is long but it provides valuable support towards the cost of care.

5) Applying for a Council Tax Discount or Exemption

Mortgage or rent is normally the largest household expenditure. Council tax is normally second. If you have been diagnosed with Alzheimer’s or dementia, and are in receipt of an Attendance Allowance, you are eligible to apply for a discount (if you live with others) or an exemption (if you live alone) on your council tax bill. This can be worth hundreds of pounds a year and provide valuable funds for your care needs.

The discount is available for other ‘illnesses of mental impairment’ as well. Applications must be made directly to your local council, they will provide forms and guidance on the details they need.

Get in Touch

At Coole Bevis, we have extensive experience in supporting clients with Later Life Planning. If you would like to discuss any of the above further or find out more about planning for care costs, please contact us by calling 01903 534587.