You have aleady taken your first step by acknowledging two things: the uncertainty of your future is concerning you; and that you probably need advice to resolve some of the issues you face. To decide the scale of the problem you need to answer the following:
- How old are you, and what is your state of health?
- Whether to plan for one or both of you to require care.
- Should you plan for home care (cheapest, usually),residential care or nursing care?
- Are you willing to downsize or use equity release?
- If one of you goes to a home will the other stay? What happens if one of you dies prematurely?
- How will you cope if one or both of you lose your mental faculties?
- Do you have a complete list of assets and income streams?
- How long are you likely to be able to live on your current level of income?
- What is your investment strategy?
The easiest question to answer is that of what happens if you had no money. You may not like it and may have less choice, but the state will provide.
You need to decide how much you can do yourselves, and where you might need professional advice. If you were my client, I would take you through the following 12 point process:
1. Fully understand your current income, assets and objectives.
2. Understand any health issues that may need treatment or curtail your activity.
3. Work out how long your pension income is likely to last, and then when you might need to draw on other assets.
4. Ensure that any gifts or investments made that reduce your access to capital or income do not fall foul of the ‘deliberate deprivation of assets’ rule on which there are no time limitations. Specialist advice is advisable on this area as it is frequently misunderstood.
5. Ensure that your assets are invested wisely, within your risk parameters, so that it can be used to supplement income without depleting the capital.
6. Consider carefully how you want to fund for care homes, whether funding in advance, or using a combination of income and drawing from capital.
7. Confirm both of you are in agreement with the overall objectives.
8. Contact a solicitor to ensure that your wills are up to date, and truly reflect the wishes of you both.
9. Complete lasting powers of attorney so that your executors know what your wishes are. This is particularly important when it comes to using equity release if this is appropriate, or selling your property to pay for care fees if this proves necessary.
10. Consider the options for care homes, both in what they offer, and what the costs are likely to be. This will help with your financial planning; and in ensuring that you go to the care home that you want. You should also consider whether any action is needed to protect any money from the outcome of the Financial Assessment means test.
11. Identify and fully brief your executors on the plan, and your wishes. People are so often shy when it comes to talking about money, but to really achieve your ultimate objectives, those entrusted with making your plans happen need to clearly understand your thinking. Ideally the executors should be a generation younger than you, so that there is every likelihood of their being around to fulfil your wishes.
12. Identify the charity or charities that you wish to support. It is also advisable to let them know about your plans, and to find out what paperwork and processes are needed both before and after your death. For example, it would help them if they know who your executors are.
All of this may seem a fair amount of work, but the end results are well worth it. We know from advising clients in similar situations that the peace of mind that comes from planning in advance in this way is priceless.