Financial advice covers several areas. For example, arranging mortgages, which we don't do, life insurance, investments, pensions, inheritance tax planning and longterm care planning, all of which we do advise upon.
A number of these areas have specialist qualifications and, indeed, I have the long-term care (LTC) qualification.
One of the basic tenets is that someone receiving care should not deprive themselves of their capital that could be used to fund their care costs, and thereby gain extra benefits from the local authority. Until now. In January the Local Government and Social Care Ombudsman found against North Yorkshire County Council.
It had stopped paying the fees for a Mrs. Y, after deciding the woman had deliberately reduced her savings by giving money to her family. This was something she had been doing prior to needing care. However, the ombudsman found she had not given the money away to avoid costs, stating “Just because someone might be living in a care home, it does not mean they should not be able to spend their money on things other than their care, and this includes continuing to give gifts to friends and family.”
The council accepted it “did not follow procedures” but said the case raised “important issues”.
And it certainly does! When is deprivation not deprivation is one, and I would suggest that a key point was that she had been gifting before she needed care. But there is another issue in this case.
As the lady in question required care from the age of 80 in 2007, and had suffered a stroke, I would assume that the gifts continued to be paid under a power of attorney. However, gifting away money is not something an attorney should be doing. The Court of Protection and the Office of the Public Guardian would view this as a breach of the duties of an attorney.
Whilst the daughter’s complaint (in this case) was upheld, it may be that she has opened a different can of worms.
So, if, generally speaking, you cannot “deprive” yourself of assets, what can you do?
Well, there are several things but crucially, do not wait until the last minute or when you are, or the loved one is, in care. It becomes all but impossible to argue that you are not depriving yourself.
It is also important that you seek advice from a properly qualified independent financial adviser. He or she will ask lots of questions, and that’s not because they are being nosey. They need to know about income, assets and intentions. They will then investigate your options and put forward a written report, with recommendations. You then decide whether to proceed or not.
Why is it important to get it right? In broad terms, LTC costs could denude an individual, and their potential beneficiaries under a will or intestacy, of all but £14,250 of capital. Income will be spent along the way too.
Did I mention I was qualified in LTC? I did. Well, it is worth repeating.