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Planning for changes

As the UK’s population experiences improved health and longer lives, there are a number of new challenges emerging and, as a nation, the industry around planning for later life is growing.

From financial advisers to care home operators, everyone has a valid and important role to play in helping to plan for an often uncertain future. But the issues are complex and wrapped in red tape, with many in the industry concerned that both private individuals and those working in the sector are left confused.

Nicola Theobold, manager at Bowerswood care home in Garstang, near Preston, said many people have little understanding of the realities of the situation, and she has been supported by Napthens’ Wills & Estate Planning team’s new ‘care home pack.’

She explained: “Many people who come to us have a very limited knowledge of everything, from funding care onwards, and we must help to advise them at what is already a very traumatic time. “There is the question of funding, whether the sale of a property is necessary to cover care fees, to whether the individual is being supported privately or by the local authority. In general there is very little information out there and it can be very unclear.

“Napthens’ care home packs have been invaluable, giving guidance on issues from Will planning to power of attorney. This kind of information helps make things clear from both the resident’s side, and the management’s side.”

Moor Park House in Preston is a care home which often cares for people with complex needs, physical disabilities or acquired brain injuries.

Natalie Neild, manager, has seen all too well what proper planning can do to alleviate stress at a difficult time.

She commented that as part of the care planning process, staff discuss what future plans and wishes the residents have, whether they have made any advance decisions, and if they have an LPA in place.

“If they don’t and they have no mental capacity, it’s quite difficult because often their next of kin wants to be involved in decision making around health but if that’s not put in place, they can’t legally do it,” she explained. “Many of our residents are younger people who have acquired brain injuries, for instance, and they tend not to have planned ahead.

“Where there is no power of attorney the Court of Protection must get involved, it can take months to sort out.”

As an illustration of the issues many face later in life, the Alzheimer’s Society estimates there will be 1 million people with dementia in the UK by 2025.

Sean Aldridge, senior associate in the Wills & Estate Planning team at Napthens works closely with care home clients and management to make sure they have all the information they need to support residents and their families.

He explained: “There are plenty of benefits to having both financial and health and welfare LPAs in place. It might give a son or daughter the authority they need to make decisions themselves, and give them the weight they need to fight their parent’s corner in relation to issues such as care decisions and medical issues.

“But don’t forget, from the care homes’ point of view it’s a good thing to make sure residents have the correct financial power of authority in place as well.

“This means there will be no uncertainty when it comes to the stark reality of paying the bills. I’ve heard of plenty of situations where a resident of a home is paying the bills themselves, but lose capacity. At which point it is a lengthy process for the family members to turn to the Court of Protection and take on the responsibility themselves.

“What we also find particularly useful when setting up an LPA, is we talk to the person involved at length and draw up a letter of wishes to giveinstructions to whoever is appointed attorney, covering more personal issues that are important to them.

“It may be that a person enjoys being in the garden, or has a particular hobby. A letter of wishes can point this out and help them have the best possible quality of life.

“We always make it clear that thorough and early planning is the best way to ensure a person’s wishes for the future can and will be taken care of.”

David Hardman, financial planner with Napthens Wealth Management, said the key is talking to clients early on and discovering exactly what they want to achieve.

He said this may be being able to afford the care they want when they are older, or reducing the risk of assets which might otherwise be inherited being sold off to fund that care, and the best way to ensure assets can be passed on.

David explained: “Many clients simply don’t want to even think of care and later life planning. But the majority will also have had some experience of a relative needing care so they do understand how important the process is.

“Effectively the situation for most is that a means test will take place and people will either have enough to fund the care they want or they won’t. Then it can depend on whether the family will help or hope the local authority will cover the cost when they have nothing left. “So we will look at the type of assets they have, the guaranteed income they have and what savings and investments will be available. Are they enough to achieve some of their objectives and if not, what can we do to help?

“We will examine whether giving certain gifts or establishing a trust can help, making sure the Will is written correctly and if there is anything that can be done to make sure not all of an estate will end up being sold to fund care.

“A care home operator can do much to help, such as offering a new resident someone to talk to and making helpful information available.”

For those with a business to run, and who may one day wish to pass the business to the next generation of the family, planning for the future has extra implications that can have a wide impact if not done properly.

Now in its fourth generation as a family business, succession planning is key to Partington’s future. The business operates caravan parks in areas including Blackpool, the Lake District and North Yorkshire.

Andrea Challis, director, explained that the business has been operating more than 70 years, and she has grown up knowing that thinking of the next generation is important.

She said: “Our parents have always spoken openly about what’s in their Wills, and how important it is to protect the business.

“When we began talking to Napthens about this issue, it became clear how devastating the results of not planning could be. If something happens to a key director, for instance, and they are incapacitated, it could literally stop the business from operating.”

For Andrea and her family, the key to this protection is to be found in LPAs. Andrea reports that all four of the business’ directors have both personal and business Lasting Powers of Attorney, including herself and her brother Rob Kearsley.

For Andrea, the risks of not having an LPA in place are stark: “Bank accounts could be closed, key people could be unable to pay cheques, it would be impossible to invest in the business

“In exactly the same way as a business owner wouldn’t go without a Will, they shouldn’t leave their business exposed by not having LPAs in place.

“It’s also important to appoint the correct person in relation to LPAs, someone who knows the business well and can make good decisions in relation to it. Without the correct planning in place, the delay in going to the Court of Protection could significantly affect the business.”

Louise Highton is director and specialist on the topic at Montpelier Chartered Accountants. She works closely with Napthens when advising businesses on such issues, and points out the issue is not just about succession planning or making a Will.

It shouldn’t be left until later in life and be seen as something younger people don’t need to worry about. She explained: “This should be done by anybody who runs a business, no matter their age.

“Lasting Powers of Attorney are not just about age, they cover important issues such as accidents and becoming incapacitated and unable to make decisions about the business.”

She warned that when preparing an LPA, care should be taken to separate what is important personally from what is important to the business.

“In my experience one of the biggest issues is that people prepare one financial LPA which therefore covers both their personal finance, and business affairs.

“They end up with a situation where someone is appointed to take care of everything but while they are capable to make personal decisions, they ultimately don’t have the experience or knowledge necessary to make decisions about a business.

“The person being chosen must be fully aware of what they’re getting themselves into. They’ve got to act in the best interests of the business.In some cases, where a business is part of a regulated industry, they too must be regulated.

“I think it’s an area that people just don’t think about but one that can have a catastrophic domino effect. What if someone was unexpectedly incapacitated and were a joint signatory on a bank account, with no plans in place to deal with the scenario?”

All the experts agree that with early planning and expert advice, the challenges of later life can be mitigated and made simpler for all concerned, whether for an individual, or for a business they control.