The following articles have been produced recently by Assurewills, and may be of interest:
Care Fee Funding - Proposals from April 2017 onwards:
New funding rules have recently been announced with the intention of them being introduced from April 2017. A summary of the proposals is as follows:
The cost of care is to be split into two areas – the cost of nursing care and residential or ‘bed and board’ costs.
Nursing care – each individual’s liability to nursing care costs is to be capped at a lifetime total of £75,000. Once this level of individual funding has been reach the state will fully fund any further nursing care costs.
Residential costs – each individual will still be required to pay for their own residential costs which include the cost of residing in any care home and food costs etc. There will be an annual cap on these costs of £12,500 per annum.
If you have total assets (including the value of the family home) in excess of £123,000 then you will be required to fully fund the costs until the capped levels are reached, if your assets are below or fall below £123,000 then the State will part fund your costs until the value of your assets fall below £14,000, at which point all of your care costs will be State funded.
It has also been proposed that care costs can be deferred until after your death, at which point your estate will be charged with the total amount due before any remaining assets are passed on to your family.
In summary, if you are in care for 5 years, and presuming the cost of your nursing care reaches during that period the capped level of £75,000, we estimate care costs would be as follows:
Nursing care fees £75,000 capped level
Residential costs £62,500 5 years at £12,500
+ £12,500 per annum residential fees from year 6
The latest on long term care fee funding
We have mentioned on various occasions in the past few years that the funding of long term care fees is now one of the major issues which concerns many of the clients we advise and complete Will and estate planning work for.
The front-page article in today’s (8th May 2012) Daily Mail newspaper refers to the issues surrounding long term care fee funding, and a letter from many major Charities and campaign groups to the Government urging action. The article interestingly suggests that the funding side of this issue is likely to be ignored again in this week’s Queen’s Speech, and the White Paper due to be published in June will also avoid the main funding points (It is no surprise the Government do not have the money to deal with the issue). Therefore it is highly likely that for the next decade or more little or anything will be done to avoid property and other major assets being sold and used to fund an individuals care fees.
As we have previously highlighted, there are significant yet simple strategies which can be adopted when drafting or re-drafting an individual’s Will which, along with some sensible estate planning which should include lasting powers of attorney, can help protect assets such as property, and ensure the control of financial decision making remains with trusted family members and friends should the need for care arise. Professional advice is essential, and is available from Assurewills today.
EPAs v LPAs
I have highlighted previously the importance of having Lasting Powers of Attorney, which you may be aware, replaced the Enduring Power of Attorney in October 2007, after changes were made by the Mental Capacity Act 2005. The act reviewed how this area of law was to be governed and the main aim was to ensure that individuals would be better cared for under the new system. Whilst you would now have Lasting Powers of Attorney drafted, previously completed and signed Enduring Powers of Attorney are still valid, and can still be registered and used when the donor has lost capacity.
I have come across in recent months a number of clients who have existing Enduring Powers of Attorney in place, which has lead to the question – is the Enduring Power of Attorney still OK to use, or should it be replaced and updated with Lasting Powers of Attorney?
There are one or two important differences between the two documents which you should be aware of and may help if you have the older Enduring Power of Attorney.
Scope of the document:
It is worth knowing that the Enduring Power of Attorney offers the appointed attorney(s) only limited powers to make financial decisions on behalf of the donor. The Lasting Power of Attorney documents allow the attorney(s) to have control over the donor’s property and financial affairs (these powers can be restricted if desired), and also over health and welfare decisions, which are outside of the scope of an Enduring Power of Attorney.
The duties of an Attorney:
Under an Enduring Power of Attorney, the Attorney(s) have only a common law duty to act in the donor’s best interest.
Lasting Powers of Attorney have a much tighter coded procedure governing Attorneys, and importantly impose a statutory duty for them to act in the best interest of the donor. This statutory duty is one of the major areas covered under the Mental Capacity Act 2005 and provides a very detailed approach to how this should be undertaken. Also if the Attorney(s) do abuse this or fail to use their powers appropriately this could result in a criminal prosecution.
The procedures for registering, and if required revoking, the respective documents differ, and I can explain more about these if you have a particular query.
As is most commonly the case the decision whether to retain an old Enduring Power of Attorney or replace it with Lasting Powers of Attorney is dependent upon a clients particular circumstances, but, with wider powers and more protection for the donor, in many cases Lasting Powers of Attorney are the better option.
Advanced Medical Directives (Living Wills)
We have been seeing a growing number of enquiries in respect of Advanced Medical Directives (Living Wills), and having explained the purpose and legal standing of these documents a number of times over recent weeks, we have produced the following few paragraphs which explain how they differ from Wills and lasting powers of attorney, and why they may prove to be a useful addition.
What is an Advance Medical Directive (Living Will):
An Advanced Medical Directive, also know as a Living Will, allows an individual to state clearly which treatments they would or would not wish to receive should they become seriously ill in the future due to illness, accident etc and were unable to participate in decisions on their treatment and care. If an Advanced Medical Directive is made you are asking the relevant medical professionals not to give you certain medical treatments. The statement, which can be written or verbal, is known legally as an ‘advance decision to refuse treatment’.
What is the legal standing of these documents:
Advance decisions to refuse treatment are covered by the Mental Capacity Act 2005, that became part of law in April 2007, and are supported by the BMA.
According to the official government website, by law, a valid advance decision refusing life-saving treatment means the individual concerned can’t be treated. If a doctor did treat the person, legal action might be taken against them.
How do they differ from a standard Will and lasting powers of attorney:
A standard Will deals with a persons estate and affairs after their death – an Advanced Medical Directive refers to certain medical treatment whilst the person is still alive.
Lasting powers of attorney generally pass on full decision making and signing powers to one or more attorneys, who will act in a persons best interests should they ever lose the capacity to manage their own affairs. An Advanced Medical Directive sets out an individuals wishes in respect of specific areas and medical treatments.
Why have an Advanced Medical Directive:
A main benefit of having an Advanced Medical Directive in place is to ensure an persons close family / friends are clear on their wishes and are not left to make what can be a very difficult decisions on their behalf without knowing their feelings.
Lasting Powers of Attorney
A case was referred to our office recently which highlighted exactly the issues that can arise and the significant problems families can be presented with should a relative (most commonly a parent) lose the capacity to manage their affairs.
A local financial adviser has been advising a family for many years (parents and children), and the surviving parent (the mother) has been assessed by a GP who has documented that she has reached a point where she can no longer manage her affairs herself and needs one of her children to take control. BUT – the mother has not yet completed powers of attorney, so can we help them?
The simple answer is no – the mother having now lost capacity to manage her affairs (which has been documented in her medical records) cannot sign a lasting power of attorney passing on signing powers to her children, and we cannot provide a certificate of capacity for her. The family can apply through the courts to have power of attorney granted, but in most cases this process will take months to complete, prove very expensive, and the courts decide who is granted the power of attorney, which if a professional attorney is involved will result in significant ongoing charges.
None of these issues would exist if the mother/family had planned in advance and powers of attorney had been drafted whilst their mother still had the capacity to complete the documents.
We should all have a Will in place, but for many powers of attorney are also vital, especially if you own pensions, investments, life assurance, savings etc, which will be in most cases registered in your own name. Should you ever lose the capacity to manage your own affairs without a power of attorney in place many of these accounts will be frozen and left in limbo.
Power of attorney instructions when compared to most Wills are straightforward, and in most cases we would have documents ready for signing within a week to ten days. Add to that a fee which is a fraction of the cost of going through the courts, and it is difficult to make a case against this advice.
Long Term Care Fee Funding - Latest News
The front page of the Daily Mail today (9th Nov) has the main headline ’20,000 A YEAR SELL HOMES TO FUND CARE’. This is part of their long running campaign to highlight the issues of long term care funding, and comes to this figure using Commons Library statistics and a few assumptions. What is reasonable to say if that the actual number of homes sold each year is in the tens of thousands and increasing each year, as local authorities become more cash strapped.
What the press do not / cannot mention is that a well drafted Will and some simple estate planning can help significantly with these issues – if you would like to know more we would be delighted to discuss the situation with you.
Long Term Care Fee Funding
Prior to the election each of the political parties set out their prospective policy in respect of long term care funding and specifically the use of an individuals assets, especially the home, to fund any care required.
The Conservatives favoured a voluntary ‘insurance’ style scheme with individuals making a one off payment in the region of £10,000 on retirement to fund any potential long term care, thereby removing assets such as the home from any funding assessment for those who are able/willing to make the payment. The Lib Dems had called the current system unfair but had not suggested any clear solution.
With the coalition now in place, they have announced full details of the deal agreed, and how it relates to various areas of policy, including social care.
It would appear that the decision on the major issue of how an individuals’ long term care is funded has been deferred, and a commission is to be set up to look at the issues and possible solutions.
Therefore, in respect of the potential threat long term care funding poses to assets such as the family home, nothing has or will be changing in the foreseeable future. By far the best thing to consider is reviewing your Will, and taking some straightforward estate planning advice to protect those assets.
If you want any further information on how this form of protection can be provided then please get in touch.
Lasting Powers of Attorney:
A report about dementia has been released by the Alzheimer’s Research Trust, carried out in conjunction with Oxford University. Whilst the main findings of the report relate to a significant lack of funding, the figures they have detailed make interesting reading – there are currently over 820,000 dementia sufferers, and this figure is expected to reach 1 million by 2025.
Given that dementia is most commonly found in the more elderly, these figure show if there was any doubt that it is an illness which can have a significant impact on many families, and as the report details it is a growing issue.
As part of our estate planning discussions with clients we explain the issues which can arise should a client lose the capacity to manage their own affairs due to an illness such as dementia (or in fact for any other reason), leaving bank accounts, finances and other accounts registered solely in their name inaccessible to spouses or other family members. The solution is to draft a Lasting Power of Attorney whilst they still have full capacity, granting signing powers to those they trust should capacity ever be lost.
Many of our clients take out Lasting Powers of Attorney when their Will is drafted, but as they are documents which relate to a time when the individual is still alive, they can be produced at anytime (whilst the individual still has the capacity), and are independent of the Will instruction. They can be an invaluable document and most individuals should consider having this type of document drafted.
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