Page 14 - CPB March 21st

How does
The Care Property
Bond compare with
other options?
There are a number of different options available to fund residential care. These options may include one or more of the following:
1Sell the property to invest the net proceeds with an option to draw cash to meet any shortfall to cover the monthly costs of care home fees. This option may be viable if the elderly person does not outlive their life expectancy. The proceeds may run out quicker than anticipated and may not last long enough to cover the elderly person’s remaining lifetime, at which point another solution will need to be sourced.
2Sell the property to purchase an Immediate Needs Annuity, Care Fees Annuity or an Annuity Certain and potentially invest any residual cash. This would be the safest option out of the three alternatives to the Care Property Bond. However, the elderly person loses the possibility to pass on the property or i3ts net equity to the next generation.
Enter into a Deferred Purchase Agreement with a Local Authority, which will then pay the shortfall on the care home fees. Unfortunately, interest in such products, rolls up and compounds which leads to a gross depletion of the customer’s Estate. The customer will not have the option to choose their care homes. This decision will fall back on the Council, along with the type of room and level of care. Whilst a Council may agree to let out the property, it may do so to social tenants at a below-market rent. Finally, this option is only available when a person’s assets amount to less than £23,250 in England or £40,000 in Wales.