Annunities

Beatle_Ray

Hi Everyone,

Cabn someone give me some advice please. My mother sufered a stroke back in June 2007 and has been in hospital ever since, she has had Cdif also in this time, no matter, i expect her to be discharged soon and she will go into care full time in a nursing home. Her assets are roughly £100,000 in cash/savings and her house is valued about £300,000, becuase of this my understanding is that she will have to pay for all her care. Can someone explain to me what an annunity is and are they worth doing. Mum is currently 78, difficult to put a put a lifespan on there, also i was considering renting out the house, can i do this, i do have power of attorney. Would it be better to do the house up and split in to two flats, may be easier and more profitable when i come to sell it. My may concern is to provide for mums care obviously, she also picks up about £700 pm in pension both private and state, the care homes I have looked at charge around £800 per week, she will need 24 hour medical care though. Also would i be able to borrow some of the money from her accounts to pay off my credit card but treat this as a loan, about £12,000, am i legally entitled to do this.

Would appreciate help and answers please.

Thanks

Beatle Ray

EdInvestor

Beatle_Ray wrote: »

Can someone give me some advice please. My mother sufered a stroke back in June 2007 and has been in hospital ever since, she has had Cdif also in this time, no matter, i expect her to be discharged soon and she will go into care full time in a nursing home. Her assets are roughly £100,000 in cash/savings and her house is valued about £300,000, becuase of this my understanding is that she will have to pay for all her care. Can someone explain to me what an annunity is and are they worth doing.

They are good value. Details and lots of other good info here:

https://www.hsbcpensions.co.uk/nhfa/pdfs/is6.pdf

You'll need to see a specialist IFA and the NHFA people seem good

Step one though is to get an assessment done to see if she is eligible for NHS continuing care - this would mean her fees would be entirely covered by the NHS.If not, there are a couple of other allowances worth around 160 pounds a week she should be able to claim.

It seems possible that her cash savings/investments would be enough to cover the shortfall -or close to it - if invested in a care annuity, but this would depend on their judgment of her lifespan. The annuity income is tax free if paid direct to the care home.

That would mean the house would not have to be sold, but could be rented out to generate additional top up income if required.

Also would i be able to borrow some of the money from her accounts to pay off my credit card but treat this as a loan, about £12,000, am i legally entitled to do this.

Ask the IFA but I'd have thought it's unlikely. Your mother can give away IHT free gifts of up to 3k a year as long as she's not depriving herself of assets needed to pay for her care.

Beatle_Ray

Hi Edinvestor,

Thanks for the reply, i read the case examples on the site you mentioned, does it follow that a lump sum of about £30,000 would cover the fee's, obviously the difficulty here is judging life span, so my understanding would be that i give them £30,000 they invest it and pay the care home direct and that covers all her costs and care and with a built in possible increase of about 5%pa.this would last her life time judged on her medical history. That way i keep the house and the remainder of her cash assets, the risk being here on my part that she passes away before i have spent that value on her care and risk on the investment that she lives longer than planned?

Appreciate your opinion. I have used £30,000 as a rough guide, appreciate it could be a little more.

Thanks

Beatle Ray

EdInvestor

I think it's going to cost her a bit more than 30k - with a total income of around 320 a week in pensions and allowances and care home costs of 800 pounds a week, she has a shortfall of 26k a year.

But try to get NHS 'continuing care' first - you may have to pay nothing. You may have to push quite hard for this as both the NHS and the LA are dead keen to push all the costs on families, but it's well worth doing if she is in need of round the clock care.

That way i keep the house and the remainder of her cash assets*, the risk being here on my part that she passes away before i have spent that value on her care and risk on the investment that she lives longer than planned?

That's it.

*if any