Planning for later life
None of us knows what the future holds and that is why it’s essential to put plans
in place which will cover every eventuality as you reach your later years.
You may be concerned about care home fees, inheritance tax or how to establish a
Power of Attorney should you become unable to manage your finances. There is also
the option of making a Living Will and many more aspects of your life plans to consider.
This area of our site sets out all the services we offer in terms of financial planning
for your own later years or if you are acting on behalf of an elderly parent.
We know that potential care home fees are a worry for people approaching their later
years and that planning for long-term care home fees can become a priority for many
of our clients.
Financial planning for long-term care home fees is a complex area and it’s essential
to take independent financial advice, especially if you are also concerned about
Inheritance Tax planning.
Our expert team of solicitors specialising in financial planning for the elderly
will advise you of all your options and take care to make your individual wishes
for care options in your old age their top priority.
Types of financial planning for long-term care
Immediate Needs Annuity
- An Immediate Needs Annuity is where a lump sum is used to purchase a life annuity
– essentially an income for life
- If the income is paid directly to a registered care home it will be tax free
- The income can be tailored to cover the gap in care fees and can escalate in line
with Retail Price Index (inflation) or at a fixed level (for example 5% per annum)
- It is possible to obtain impaired life annuity rates depending on the state of your
health. This means that the level of income payable will be higher for an older
client in a poor state of health
- Immediate Needs Annuities can be a useful and tax-efficient way of planning to cover
the cost of future long-term care home fees
- It is also possible to include some capital protection, to protect your estate in
case of your death in the first few years of the policy
Pre-Funded Long-Term Care Insurance
Pre-funded long-term care insurance is a stand alone risk-based insurance contract.
The purpose of this type of policy is to pay out a regular sum, if the long-term
care policy conditions are satisfied and the client requires continuous care in
a care home.
The main features are:
- The level of pre-funded care cover is selected at the start of the process and is
based on your individual needs
- There is no investment content; it is an insurance only contract with no associated
- Premiums are normally payable on a regular basis or a one-off single contribution
- There may be a waiting period before your pre-funded long-term care insurance benefits
are paid out
- The level of pre-funded, long-term care insurance benefits can be escalating, to
keep pace with increasing costs
- All pre-funded care insurance policy payouts are tax free
Deferred Care Plan
A Deferred Care Plan is the term to describe any arrangement where there is a waiting
period before benefits are paid out. It can apply to either annuities or pre-funded
care insurance contracts.
- Deferring the benefits can significantly reduce costs. The longer the deferred period
the cheaper the cost of the annuity. Benefits can normally be deferred for up to
- The length of the deferred period selected should depend on how long you can afford
or want to self-fund your long-term care. It is therefore very important that the
deferred period is appropriate for your financial position
- You will normally need to self-fund your long-term care during the deferred period;
however this product can remove some of the uncertainty and anxiety about living
beyond the self-funding period
If you do not require long-term care in a care home but still need financial planning
for your old age then Equity Release is a means for you to benefit from the value
of your home without moving out of it.
There are 2 main types of equity release:
- Lifetime Mortgage arrangements
- Home Reversion Plans - where all or part of the property is sold
Equity Release is only suitable in some cases and can significantly reduce the value
of the estate and the legacy left to chosen beneficiaries.
What is a Lifetime Mortgage?
A Lifetime Mortgage is where a loan is secured against the property value or future
value of the property. You will retain the right to live in the property for life.
- These schemes offer the release of a lump sum or the facility to withdraw capital
up to a certain level of the property value when required
- Releasing capital and/or income resulting from your property may affect your entitlement
to state benefits
What is a Home Reversion plan?
This is where part of your property is sold to a reversion company – a business
which specialises in buying shares in your home. The advantages to you are:
- You will retain a lifetime tenancy - the right to remain in your own home until
your death or the sale of your property
- You could have the opportunity to release a substantial lump sum or income. As there
are no mortgage and interest charges, this type of scheme often releases higher
levels of income
What is a Safe Home Income Plan (SHIP)?
SHIP is a company supported by a group of lenders which promotes equity release
and safe home income plans. It was set up in 1991 and members agree to follow a
code of practice. Not all equity lenders are SHIP members.
- With schemes covered by SHIP you cannot lose your home and the accumulated debt
cannot become greater than the property value
- The Code of Practice states that plans must be clearly explained in terms of benefits,
obligations, variables and limitations
- The solicitor conducting the legal work must sign a certificate confirming that
the details of the scheme have been explained to you. The certificate will show
the effect of the loan on your home and estate and what happens upon the sale of
Independent Financial Advice
If you would like help with any aspect of financial planning please contact our
Independent Financial Advisor, James Mann, on 0808 129 3320 or complete our
online enquiry form and we will get in touch with you.