Estate Planning Guide

Pensions and care fees Example Adjustable annual income taken by pension holder from age 65 Annual income available to pension holder from a £40,000 annuity £40,000 PENSION POT Pension holder receives £1,000 per annum 104 PROFESSIONAL CONNECTIONS We won’t be putting something to them that only works from one perspective.” For these reasons, Cole feels that, “any sort of accountancy firm that wants to be taken seriously has got to have an appropriate structure, whether that’s their own financial planning business or some sort of formal tie- up with another firm. I think the days of people just being general practitioners advising on all sorts of areas are long gone and advice has become increasingly specialist, whether that’s tax or audit or financial planning...To retain and be able to service clients properly and avoid future legal claims and give them the best advice, help them achieve their business and personal objectives, you’ve got to have that wide offering of services.” That doesn’t mean it’s easy to do. Cole points out that regulatory costs and director obligations are now quite onerous and there’s a real shortage of advisers, making recruitment of advisers with the requisite skill set, necessary experience and specialist qualifications, quite challenging. So, it can be costly for accountancy firms looking to put this sort of operation in place, it can be costly. Consequently, for smaller accountancy firms, a strategic relationship or a joint venture with a chartered financial planner offering fee-based, independent whole-of- market advice, may be more appropriate. Cole says, “it takes a lot of investment in time and people”, but it is also mutually beneficial to clients and accountants. Clients are increasingly discerning and require specialist services and advice and legislation is increasingly complex. It’s no longer feasible to be a general practitioner like people might have been 30 years ago, seeking to keep on top of all different areas. That model doesn’t work anymore. SHELDON COLE, THOMAS WESTCOTT CHARTERED ACCOUNTANTS When assessing the value of personal pensions as a part of care fee calculations, a Local Authority will look at: • any money in or taken from an individual’s pension pot – either as cash or income • any other income an individual has • an individual’s assets (e.g. savings and investments). Money left in a pension pot will not be counted by the council won’t but once the individual reaches the age of state pension eligibility, the local council will assume they are receiving an income from their pension. If they aren’t or are just receiving a minimum amount, the council will check how much the individual would receive if they bought an annuity and use this amount when working out the income. This is calculated as the maximum income that would be available if the individual had taken out an annuity and is either taken from the pension provider or from the Government Actuary’s Department. Any other assets, including any already existing annuity and cash taken from the pension pot and put into savings or investments, will be taken fully into account. Practicalities and Tips 5.1 But 50% of the income will be disregarded if the individual is married or in a civil partnership provided it is actually passed over. When an individual takes an adjustable income, their council will base their assessment on how much the individual would get if they bought an annuity.