English Mutual Case Studies
Mrs Davis
Mrs Davis has worked hard all her life and was looking forward to leaving an inheritance to her children and grandchildren. Unfortunately she had recently sold her property to move into a nursing home. She had a sum of £247,000 in a cash deposit account and asked if English Mutual could establish how she could leave as much as possible to her family whilst making sure she could provide for her care for the rest of her life. Although Mrs Davis was 90 years old she was in good health. The only reason she needed care was the fact that her mental health had began to deteriorate. With a sister of 99, Mrs Davis and her family had a history of longevity.
There were a number of options available to Mrs Davis and her family, other than simply spending the proceeds from her house sale and savings accrued over the years – and hoping for the best. First, we made sure that Mrs Davis was receiving any state benefits that she was entitled to and that she had been assessed for any entitlement to NHS Funded Nursing Care. We also established whether Mrs Davis was eligible for NHS Continuing Healthcare, but unfortunately she was not.
As Mrs Davis had assets over the upper means test threshold she had to pay for her own care. Her income was £12,116 per annum and her care fees were £31,908 per annum and, therefore, she would have to find an additional £19,792 each year. This shortfall is likely to increase each year as care fees increase and the value of her capital decreases.
Although Mrs Davis could have created a reasonable income by investing some of her money, it would not have covered the total shortfall and Mrs Davis and her family did not want to take any excessive investment risk. They were looking for a more secure income and, therefore, took out an Immediate Care Plan for £118,665*, to cover the shortfall between her income and the care fees. In return for a one off payment of £118,665 a guaranteed income would be paid for the rest of Mrs Davis’s life. The income in the first year would be £19,800 and this would increase each year by 5%. In addition, because the family had secured a guaranteed income and the rates on cash savings were so low, they decided to invest £70,000 in a very cautious portfolio for growth – and also to provide flexibility to take an additional income if this were necessary in the future. The remaining capital was left as cash.
At the time of writing, Mrs Davis is still living in her chosen care home without fear that she will outlive her capital. We meet with Mrs Davis and her family once a year, to review the investment and ensure the care plan continues to provide sufficient income. By purchasing the care plan, Mrs Davis was able to retain £128,335.00 of her capital (£70,000 as an investment and £58,335 as cash) and this value has the potential to increase.
* Partnership Assurance