Janet Davies discusses the issues advisers need to tackle when discussing the issue of long term care with clients
There are two distinctly different areas of care fees planning. One is the immediate side of things and the second covers younger people who wish to plan ahead. As they are so diverse, advisers must draw a thick black line between the two and while it is perfectly possible for the same adviser to operate in both areas each field does require a slightly altered approach.
Starting with the immediate needs area, this is fundamentally where planning ahead is no longer possible. The client needs care now and they and/or their representatives need help with how the care fees can be paid indefinitely and without worry. There lies the first major issue for an adviser, exactly who is the client? It is the person needing care of course, it is their money that it is being discussed. However, unlike straightforward financial planning, it is likely the adviser will not meet the client in person. This means all communications and future transactions will be in the Œthird person¹ and it is vital, that fact-finds make allowances for this.
So, if the adviser does not get to meet the client, under what authority can they discuss their financial situation? It is essential that the adviser establishes, at the earliest opportunity, the fact that the person asking them to help has the correct legal authority. This will usually be via 1) a Power of Attorney (Enduring, Lasting or Continuing) or 2) a Receivership Order or Deputyship, both issued by the Public Guardian. Advisers should insist on proof that these authorities exist before they start to work on the clients¹ behalf. Without these legal powers, an adviser cannot legally discuss the financial affairs of their client (the person in care) without the client themselves being present. Should this happen, the adviser then has the added complication of having to judge mental capacity while also ensuring that the client is not being placed under any undue pressure by their unofficial representative.
Assuming that the correct power exists, it is vital that the adviser is able to demonstrate a true compassion for the situation. As such advisers need to remember that the person they will never meet will once have had financial wishes and objectives, wherever possible these should be incorporated into the solution.
Advisers wishing to work with their clients for a short period of time should give immediate needs care fees planning a wide berth. Researching the best financial options can realistically take four to six weeks, but dismantling a life and selling the family home can take much longer, it is not unusual for an adviser to be working closely with a family for months, if not years.
Advisers working in this area must know the benefit system inside out.
Families will be placing a lot of trust in them and it is imperative that this trust is not misplaced. When a family has to face the issue of care, they are bombarded with so much information that they do not know which way to turn. A good adviser can calm the situation and ensure that everything that should be claimed, is being claimed.
Turning our attention to younger people wishing to plan ahead. While a thorough working knowledge of the legislation is paramount, the approach is nowhere near as sensitive. Advice will be given to the person themselves, not via a third party, and in the vast majority of cases judging mental capacity and undue influence will not be an issue.
It is a given that discussing a time when your client is not able to look after themselves is not the most pleasant subject but it should not be ignored. The subject demands much more reverence and advisers must grasp the nettle and introduce the subject with every client over the age of say, 60.
Historically, the old style pre-funded plans were not popular with the adviser community, and for various reasons they are no longer available and/or really viable. But, that said, advisers must make sure they are mentioning the subject to their clients.
It should not be difficult for advisers to draft a working Œcare fees report¹ for their clients; this could include:
€ The cost of care, both at home and in a care home. What are the client¹s preferred options, who is aware of this preference?
€ Current and possible future legislation.
€ State benefits, income, expenses and available capital.
€ All legal aspects, ensuring that the clients have established the correct power of attorney.
Preparation is all in financial planning and none more so than in care fees planning. If a client at least knows the legislation and understands how this will affect them, the adviser is part way to covering the potential problem. Add to that a personal calculation of the likely costs and implications, each client would be able to face the situation more positively and make more informed decisions.
Janet Davies is joint managing director of Symponia
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