Care

Question 1

Benefits of Ingenious Care Plan (8)

Answer 1

• for clients who may need care in the future
• plan is liquid / funds provided (by ingenious) within 2 weeks
• ingenious provide help selecting a suitable care package
• funds outside estate after 2 years /qualify for BR
• maximising the estate
• client has CFL

Question 2

Benefits of immediate Needs Annuity (6)

Answer 2

• no investment risk/guaranteed income
• if client lives longer than expected then will help cap cost of care
• meets ATR
• simple to understand
• payable for life
• income is index linked to help with increases in care costs
• payment to REGISTERED care provider is tax free
• immediately outside the estate for IHT purposes
• due to age/medical conditions should get enhanced income
• helps enable future gifts of remainder of estate

Question 3

Drawbacks to Immediate Needs Annuity (6)

Answer 3

• client may not live long enough to receive full value
• no capital protection / if client dies prematurely then less in estate to pass to family
• income taxed if care provider not registered
• care fees may increase by a greater amount than index linking of the INA
• this will lead to an increasing shortfall each year
• income is fixed/ can not be altered
• may be costs of setting up INA
• income provided may not cover full care costs
• if health worsens INA May be seen as poor value
• takes no account of future increases in care costs
• inflexible / no ability to change after cooling off period
• loss of capital in event of early death
• loss of potential returns from investing

Question 4

SJP Special Care / vulnerable client Procedures (5)

Answer 4

• should have a third party present
• if an LPA is in place then attorney should be present
• establish if client has mental capacity
• must not give advice to client if unable to make their own decisions
• 3rd party must be copied in on correspondence
• relevant section of CFR complete

Question 5

Duties of attorneys (10)

Answer 5

• duty of care
• carry out donors instructions
• not to take advantage of their position
• duty of good faith
• confidentiality
• not to delegate unless authorised to do so
• comply with directions from CoP
• not to disclose information without complying with relevant guidance
• keep accounts
• keep donors property and money separate from their own

Question 6

Long term care fact finding considerations (10)

Answer 6

CLIENT:

• Health/disability
• life expectancy
• clients attitudes to remaining at home
• IHT considerations
• any care benefits currently being claimed? AA?
• CFL
• future gifts planned?
• likely timeframe until care is needed
• have they had a care assessment?
• do they need guaranteed income
• no they need any capital lump sums?
• any tax implications from selling existing assets?

FAMILY:

• family support (care available)
• who is making the decisions - POA details
• third party top ups
• prepared to use other assets to fund
• would they downsize?

CARE:

• legal provisions / will provisions
• timing of care - availability and type of care available
• likely care costs
• inflation assumptions

Question 7

Advantages of downsizing to pay for care (5)

Answer 7

• equity released to invest
• maintenance costs are reduced
• smaller property more suited to needs
• independence retained
• reduces exposure to property / increases diversification

Question 8

Disadvantages of downsizing (6)

Answer 8

• costs of selling will reduce the amount available
• family home lost for next generation
• state benefits may be lost
• new investment may lose value
• stress
• may impact on means tested state bens / local authority funding
• GWR rules

Question 9

Advantages of renting out he family home (4)

Answer 9

• future property growth retained
• more suitable property can be rented
• rental income may contribute to care costs
• deferring property may benefit from future price rises (though opposite may be true also)

Question 10

Disadvantages of renting out the family home (7)

Answer 10

• doesn’t release equity as a lump sum
• ongoing responsibility for property maintenance
• may impact on men’s tested state benefits and LA funding
• need to managed tenants / employ management firm
• CGT implications
• income is taxable
• probable void periods
• income generated may not meet care costs

Question 11

Reasons to set up / process of setting up an LPA (7)

Answer 11

• LPA should be set up so that it only becomes active once capacity has been lost
• so that others can’t make decision until they have lost capacity
• the mental health act 2005 recognises the mental capacity can come and go
• end of life instructions can be included in the H and W LPA

Question 12

Advantages of using a lifetime mortgage with a drawdown facility to fund ongoing care costs (6)

Answer 12

• flexibility in the amount and frequency of withdrawals
• interest is only charged on amounts withdrawn
• income is tax free
• there is a ‘no negative equity’ guarantee
• can remain in their own home
• enable them to pass on property to children
• benefit from future increases in property value

Question 13

Drawbacks of using a lifetime mortgage with a drawdown facility (6)

Answer 13

• set up costs/ legal fees
• still responsible for maintaining the property
• reduces inheritance for beneficiaries
• interest rate likely to be higher than a normal SVR
• inflexible
• likely to be restrictions in downsizing
• likely they loan will need to be repaid if they enter permanent care

Question 14

Purpose of Certificate Provider’s Statement? (4)

Answer 14

• purpose is that someone independent of the client
• and the attorneys
• can confirm that Philip understands the purpose and scope of the LPA
• and to establish that he is not acting under duress
• his mental competence will be established by his GP
• using a mini mental state exam

Question 15

How does lacking mental capacity affect how future care decisions can be made in clients behalf?

Answer 15

• LPA can not be set up
• CoP will decide who will be appointed as deputy
• the deputy’s powers are likely to be more restricted than under an LPA

Question 16

Reasons for an H&W LPA over an Advance decision

Answer 16

• advance decision only covers end of life medical decisions
• a advance decision is legally binding but can be challenged if not clear
• a correctly prepared LPA can not be challenged
• clients should both write a H&W LPA whilst they have capacity
• clients can take account of their current circumstances e.g m. Early onset of altzhiemers
• LPA sets Out how they wish to be cared for on an ongoing basis ASWELL AS end of life care requirements
• LPA should be set up on a jointly and severally basis
• Allow the attorneys to act Independently of each other

Question 17

Implications of financial / health decisions if lose capacity without an LPA in place

Answer 17

• no instructions will have been provided about future finance/health care needs
• this would now come under the jurisdiction of the Court of Protection
• a Deputy would be appointed by the CoP
• this may end up being a close family member
• until a Deputy is appointed no financial transactions can take place
• and no arrangements for care can be made
• Deputy is unlikely to be granted powers to make gifts, any estate planning or make any end of life decisions

Question 18

Decisions required in an LPA

Answer 18

• who will be the attorneys
• same attorneys for each LPA
• do they want replacement attorneys
• whether attorneys have the power to act jointly or jointly and severally
• who the certificate provider will be
• when does the donor want the LPA to come into effect
• instructions for future gifts/ care/ end of life decisions
• who the donor would like to be notified when the LPA is registered

Question 19

How would you ‘check out’ a new attorney? (6)

Answer 19

• do they have authority to represent the client
• LPA documentation ha OPG stamp on each page
• Type of POA?
• are there any restrictions on how they can act?
• how many attorneys/replacement attorneys are there?
• can they act jointly or jointly and severally?

Question 20

How are income and assets assessed for care provision

Answer 20

• any DLA is disregarded
• the value of any property is disregarded if anyone else lives there too eg. Spouse
• FAD are treated as what income they would have produced if they bought an annuity
• any due inheritances are included
• 50% of joint savings is included

Question 21

Factors to consider regarding long term care:

Answer 21

Level of disability/ attitude of the family

• when is care likely to be needed
• how long for
• what is the current medical and family opinion regarding about the clients current care requirements
• possible future changes
• what care is available at home
• clients and families attitude towards care provision
• if residential or nursing care is needed to they have a particular care home in mind?
• has a care assessment been completed

INCOME:

• what income do they currently have
• what benefits are they currently receiving
• what is their marital status, jointly held assets generally treated as owned 50/50
• any unearned income
• what pensions do they have ?
• TFC to be taken?

ASSETS:

• what assets do they have?
• share portfolio with CGT?
• tax implications
• inheritances due?
• liabilities
• is it important to maximise income to pay for fees or maximise estate
• can they encash investments to pay for care
• aims, Growth/income

ATR
CFL

• desire to remain independent
• do they have a will
• has an LPA been set up?
• what type?
• who are the attorneys
• any restrictions?
• are the family aware of the clients intentions
• clients views towards gifting and IHT planning
• previous gifts made

Question 22

Factors to consider for funding of care costs (10)

Answer 22

• cost of care
• stability of the condition
• assumed inflation
• assets
• CFL
• ATR
• other sources of income eg pension, investment income
• IHT consideration
• family considerations, eg ability to part fund/ provide care
• attitude towards IHT planning / gifting
• affordability for the client
• possible third party top ups
• clients desire to remain independant
• level of benefits to be received

Question 23

Advantages of domiciles care (3)

Answer 23

• peace of mind, the client can stay in familiar surroundings and still receive care
• often cheapest way to receive care
• no restrictions on eg visitors or keeping pets

Question 24

Disadvantages of domilcilary care (4)

Answer 24

• care not 24/7 so maybe a risk
• appointing carers needs to be managed
• agency carers give no guarantee of continuity of staff
• may not be suitable when a significant amount of care is needed

Question 25

Sheltered accommodation

Answer 25

• range from Luxury apartments to self contained flats
• private or public
• ability to live independently but knowing help is close by in an emergency
• not suitable for people with high levels of care requirements
• costs similar to domicilary care
• typically used by people to downsize

Question 26

Immediate care and reablement

Answer 26

• provided free by NHS
• for patients who need short term intensive medical care
• usually at home
• for individuals who would otherwise have to have inappropriate in patient care
• result of assessment of needs
• must have planned outcome
• time limited - usually 2-6 weeks
• aimed to promoted independence
• and limit time in hospital

Question 27

Respite care

Answer 27

• provide cover for normal cater if they are unable to care or need a break
• provided free by NHS if they qualify
• or local authority if not, who will probably charge

Question 28

Residential care home

Answer 28

• technically known as ‘care homes without nursing’
• run by councils or usually commercial care homes
• provide personal care for people who do not need medical care

Question 29

Nursing care home

Answer 29

• similar to residential care homes but provide registered nursing care
• client likely to be highly dependant on care
• costs higher than residential care due to medical support or additional staffing levels needed

Question 30

Hospital care

Answer 30

• for individuals with high degree of medical care needs

- usually highly dependent on care provided by others

Question 31

Elderly mentally ill care

Answer 31

• care for elderly with illnesses such as dementia

- nhs provision

Question 32

Qualification rules for Financial Assistance

Answer 32

• income and assets under £23,250

- in England

Question 33

Reasons not to recommend the SJP Later life planning scheme (6)

Answer 33

• where client can not afford to make an outright gift
• where client is already in receipt of AA or DLA
• particularly if they are funding care costs
• if funding care then An INA would usually be more appropriate
• where client is not concerned about care in the future
• it is unlikely the client will survive 7 years

Question 34

Benefits of SJP Later Later Planning Scheme

Answer 34

• income for life or until fund exhaustion on qualification to pay for care costs
• investment free of IHT after 7 years
• all growth immediately outside estate
• freedom to vary beneficiaries
• IB must be written on lives of some or all beneficiaries which gives the trustees flexibility to defer encashing the investment until a more opportune time
• ability to select a rising income on qualification under the scheme

Question 35

Drawbacks of SJP LLP Scheme

Answer 35

• NRB needs to be available
• DOV should be considered if client has received inheritance in last two years
• BR/EIS solutions should be discounted first
• outright gifting should be discounted
• where client has sufficient assets to fund care then a Gift Plan should be considered
• where client wishes to access capital then a loan plan should be considered

Question 36

Why is it important to have at least one replacement attorney for each power of attorney:

Answer 36

• if attorney is unable to act / dies
• then the LPAs will end
• if this happens then future decisions will fall to a Deputy
• who is appointed by CoP
• and may not act in the way the client wishes
• replacement is likely to act as client would want

Question 37

Gifts that attorneys may make under an LPA (5)

Answer 37

• gifts on customary occasions (birthdays etc)
• gifts that follow any previous pattern
• under the ‘de minim is’ Rio, gifts up to £5500 per year may be made
• however the size of gif t must not be unreasonable in relation to the size of the donors estate (not them them short is money)
• unable to make substantial gifts even if for IHT purposes, without permission of CoP

Question 38

6 advantages and 6 disadvantages of an immediate needs annuity (12)

Answer 38

Advantages:

• guaranteed income
• for life
• tax free if paid to registered care home
• simple to understand
• immediately outside estate for IHT
• if in poor health then could get enhanced rate
• enables to make further gifts from estate in the future
• if live longer than expected then caps the cost of cap

Disadvantages:

• income taxed if care provider not registered
• costs of setting up INA
• costs of selling existing investments
• takes not account of future care cost increases
• inflexible
• loss of capital on early death
• loss of access to capital
• loss of potential returns from investing in asset backer investments

Question 39

How must an attorney of an lpa act? 5

Answer 39

• follow instructions the donor included in LPA
• consider any preferences the donor included in the LPA
• help the donor make own decisions as much as they can
• make decisions in the donors best interests
• respect donors human and civil rights
• make the decisions themselves / not ask someone else to make the decisions for them
• though they can get help with difficult decisions

Question 40

What a donor can and cannot do (re gifts etc)

Answer 40

• can make gifts for occupations such as birthdays
• make donations that the donor would not object to Eg to charities they had previously donated to

Must apply to CoP for any other type of gift
Such as:
- making interest free loans
- letting someone live in the donor is property without paying market rent
- pay school fees

Must ensure the donor can afford them and is not left short of cash

When selling donors property they must get legal advice if:

• sale price is less than market value
• they intend to purchase the property themselves

Attorney can apply for a statutory will if donor needs to make one but cannot make one themselves

• can not change donors will

Question 41

Principles of the mental health act 2005 (4)

Answer 41

• MHA recognises that mental capacity can come and go
• when exercising powers under the MHA
• the attorney is required to let the donor make their own decisions
• unless it can be shown that they are unable to do so
• must also recognise that just because the donor makes a decision that the attorney feels is strange or unwise does not mean they are mentally incapable of making a decision