Replacing a bond without bring the capital into consideration for the local authority for care fees
Neale
Member
We have a new client, with some ancient onshore bonds sold by high street banks. They are very expensive, and have very limited fund choices (1 bond has 4 investment options!). The fund charges are over 1% and overall, they are far from ideal products.
The client is 68 with no immediate care needs, but it's fair to say that they are not in great health.
I was wondering if anyone had any thoughts about how the capital would be treated with regards to care fees (if care was needed one day in future) if I recommended that the bonds are surrendered, with the proceeds being reinvested into a new bond.
My (very optimistic!) thoughts were that the value of assets available to the local authority is equal before and after the transactions, hence no deprivation has taken place. However, the local authority may well take a different view.
Does anyone have any experience or expertise here?
Comments
To cause deprivation you have to have assets within scope that go out of scope.
You don't have that scenario so I share your view. I believe that is the correct view but cannot point you to where it says that.
In any event, you have substantive reasonable reasons for doing what you are doing with no contemplation of care fees so it should not be an issue anyway. if all this money was sitting in the bank and you chose to purchase some life assurance bonds would you be worried?
Technical stuff aside, the Social Care assessment is such a red herring - most clients would have assets way over the £23,250 threshold (£100k in Oct 2025), and would never want to put decisions about paying for their care (and what hell hole of a Local Authority home they get put in) in the hands of Social Services.
Much better to put them in the best place possible so they can choose and pay for their own care....in my humble opinion!
Yes - I certainly don't want to be in the type of place you get when the council are paying.