The essential role of financial planners and solicitors in adult social care planning

Adult social care is a crucial but often overlooked element of financial planning.

Many clients either underestimate the potential costs involved or fail to plan for them entirely. In England, NHS figures estimate that care can cost:

• £20 an hour for home care
• £700 a week for residential care
• £850 a week for nursing care.

Without preparation, clients may find themselves needing to use a significant portion of their estate to cover these expenses. This can have implications for their own financial security, the wellbeing of their surviving partner, and the inheritance they leave for future beneficiaries.

The Labour Party recently scrapped proposed care reforms that would have introduced a lifetime cap on care costs and raised the asset threshold for state-funded support. As it stands, individuals must fund their own care until their assets fall below £23,250.

Although a review of the social care system is scheduled for 2028, it’s currently unclear what changes it will bring. In the meantime, clients may need to rely on their personal savings, investments, or equity from their property to fund their care.

However, by making preparations for care in their financial plan, clients can protect their assets, maintain their quality of life, and ensure their wishes are seen through. Financial planners and solicitors can play an integral role in ensuring such planning is effective, efficient, and compliant.

Read on to find out how our sectors can help clients prepare for the costs of adult social care.

How financial planners can help clients prepare for care

Financial planners can help clients prepare for care in both the short and long term by assessing potential costs, exploring funding options, and building plans that protect their assets while ensuring access to quality care.

Evaluating immediate needs annuity options

An immediate needs annuity provides a guaranteed monthly payment directly to a client’s care provider for the rest of their life, in exchange for a one-off lump sum. These annuities are often index-linked, meaning the payments can rise in line with inflation or the cost of living.

The cost of the annuity is based on several factors, including the client’s age, health, and expected care requirements. By making a single upfront payment, they can be clear on exactly how much of their estate will be used to cover care costs. This can offer them peace of mind, as they will know that their remaining assets can still support their beneficiaries.

A financial planner can help clients compare different annuities and choose a suitable option based on their needs. They can also assess whether an immediate needs annuity is a better option for a client than funding the care directly.

Using cashflow modelling

A financial planner can use cashflow modelling to help clients explore a range of scenarios that account for the potential costs of long-term care alongside other factors.

Cashflow modelling looks at variables such as the client’s current and projected expenditure, income sources, savings and investments, inflation rates, and assets. A financial planner can then use that information to present a range of figures that the client may need to prepare for.

The client can then proceed with confidence, either knowing they can meet potential care costs or understanding the adjustments they need to make to stay on track.

Exploring asset gifting options

One of the key considerations when clients plan for care costs is how much of their estate will be left for their beneficiaries. If they require care for several years, their estate may be significantly smaller when they die.

To manage this, clients could consider gifting assets to beneficiaries during their lifetime to reduce the overall value of their estate. This could limit the amount used to cover care costs and mitigate some of the IHT liabilities their beneficiaries might face.

A financial planner can support clients in evaluating whether gifting is a suitable option, and if it is, how it can be carried out efficiently.

How solicitors can help clients prepare for care

Solicitors also play a key role in helping clients prepare for care by ensuring the appropriate legal documents are in place and compliant.

Registering Lasting Powers of Attorney

Clients may need to register both a health and welfare Lasting Power of Attorney (LPA) and a property and financial affairs LPA. Doing so is a crucial step in preparing for the possibility that they may one day be unable to make decisions for themselves.

Putting these LPAs in place early ensures that decisions can be made quickly and in the client’s best interest.

Solicitors can provide guidance to ensure the documents are correctly drafted, legally validated, and fully reflect the client’s wishes.

Establishing trusts

Trusts can be an effective way to protect certain assets from being considered part of the client’s estate when they die.

A well-structured trust could help ensure that wealth is preserved for intended beneficiaries, rather than being used to cover care costs.

Solicitors are key to establishing trusts, ensuring they are set up in a way that is compliant and that the trustees are aware of their legal obligations when managing the trust.

Rewriting wills

As clients plan for potential care needs, they may need to review or rewrite their will to ensure their estate is protected and their wishes are clearly reflected.

A solicitor can help assess whether the existing will still aligns with the client’s current circumstances, including any changes in family dynamics, financial position, or long-term care considerations. They can also facilitate the rewriting if necessary.

Financial planners and solicitors can work together for the mutual benefit of our clients

Financial planners and solicitors offer different skill sets and expertise, but both can be put to use for the mutual benefit of our clients.

Through collaboration and cross-referrals, we can work to help clients protect their assets, support their care needs, and honour their long-term wishes.

To find out more about how our sectors can collaborate, get in touch.

Email info@fbwealth.co.uk or call us on 0333 1122211.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, cashflow planning, tax planning, trusts, Lasting Powers of Attorney, or will writing.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Equity release will reduce the value of your estate and can affect your eligibility for means-tested benefits.