For an elderly person who requires care there are a great many decisions to be made either by themselves or their attorney if they have lost the mental capacity to make decisions for themselves.
The first decision will be where their care will be provided. Someone considered to be a self funder because they have assets above the upper means test limit of £23,250 could have a good deal more choice of how they receive their care than someone who is reliant on their local authority. This is because the local authority will have a cap on the maximum they will pay for a bed in a residential care home. An elderly person who owns their own property may wish to stay in that home but may need to access some of the capital tied up in the property in order to pay for their care needs. This can be achieved with an Equity Release Scheme which includes both a Lifetime Mortgage and a Home Reversion Scheme.
A Lifetime Mortgage is a loan that is secured on the property that will not require repayment until you die or leave the property to move into residential care. No interest repayments are required as this can be added to the loan amount and paid off once the property is sold. Home Reversion schemes differ in that the ownership of the property transfers to the plan provider in return for a lump sum. Again the arrangement is repaid from the sale of the property.
If your home has been sold you may be in receipt of a capital sum. You have the option to invest this capital to provide an income to pay for your care; however in reality with interest rates being a low as they are the income produced is unlikely to cover the cost of your care. This would therefore result in the need to draw on the capital sum. The danger of this is that the capital sum could be completely wiped out in a very short space of time. In order to make your capital last your lifetime you may wish to consider a Long Term Care Plan.
This type of investment offers a guaranteed income for your life. The rates paid are calculated based on age, medical history and life expectancy and as a result ten to produce much higher returns than a standard annuity. Another benefit is that the income is paid tax free if paid directly to your registered care provider.