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A PRACTICAL EXAMPLEBella Aldred was 81 and following a stroke was no longer able to manage independently. She became resident at a nearby care home where the fees were £565 per week. Following the sale of her house, her assets amounted to £161,937 and the difference between her total income, including pension and benefits and her care costs was £19,873 per annum. The family were concerned that the requirement for a return of over 12% per annum would result in capital erosion. Despite her stroke, Bella remained strong and indeed her mother had lived to be 95. They were worried that over the longer term, Bella may exhaust her capital and be forced to move to a home charging lower fees as they were aware that the local authority would not fund the fee level in her preferred home. Following the preparation of a Care Fee Funding Report and after obtaining the most competitive quotations for care plans, the following table and graph were prepared for the family.
The above shows how the projected capital position varies over time under the different options available. After careful consideration, Bella’s family opted for the partial care plan approach on the basis that it secured her care costs using 36% of her available capital and thus protected over £102,000 of her estate to provide the family inheritance which was so important to her.
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