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As house prices fall by 7%, equity release applications in Scotland more than double
27/04/2010Equity Release Solicitors’ Alliance member, Caesar and Howie report large growth in numbers of Scottish equity release clients
As Scottish houses prices have plummeted by almost 7%* during 2009, figures show a marked rise in equity release in the same period, according to Caesar and Howie, the first Scottish member of the Equity Release Solicitors’ Alliance, (ERSA).
Comparing the first three months of 2010 with the same period in 2009, Caesar and Howie has seen a 55% increase in the number of equity release cases they advised on, supporting leading market figures which show that the value of equity release plans across Scotland increased by 102% from £4.5m (Q1 2009) to £9.1m (Q1 2010).**
This growth represents a sea-change for the Scottish equity release market. Until recently, equity release has not seen the kind of growth in Scotland that has been evident elsewhere in the UK. Older homeowners with adult children have traditionally chosen to downsize from a larger house to a smaller one. However, an increased awareness of the benefits of equity release, coupled with a drop in house prices that make downsizing a less viable option, has led it to become an increasingly popular alternative.
Another possible reason for the growth of equity release is increased regulation and protection in the sector, offering peace of mind to potential customers. Caesar and Howie’s membership of ERSA shows a commitment to specialist, impartial legal advice on equity release for all older homeowners considering an equity release plan.
Releasing equity allows homeowners to remain in their home alongside generating money which can be used to improve their standard of living in the absence of a large pension, or to spend on home improvements and life’s luxuries.
David Borrowman, Managing Partner of Caesar and Howie said;
“Over the last year, we have seen a marked growth in the Scottish equity release market which comes from an increased awareness of the benefits of equity release, an increased confidence in the sector and a housing market that makes downsizing a less viable option.”
“Roughly 95% of our cases over the past year have been down to enhancing “lifestyle choice”- in other words, to improve income during retirement by releasing capital from their homes.”
*Average Scottish house price (all houses) Halifax House Price Index
Q4 2008 - £132,963, Q4 2009 - £123,805
** Key Retirement Solutions Index, (Q1, 2010)
Scottish Pensions Association Conference
20/04/2010
A large gathering of senior citizens enjoyed a lively annual conference of the Scottish Pensions Associating in Edinburgh on the 15th of April. George Henderson, OBE chaired the conference which was the seventy third in the Association’s history. Keynote speakers were Margo MacDonald MSP, Justin Glass from the Glasgow Old People’s Welfare Association and David Borrowman from Caesar and Howie.
A theme of all the speeches was the lack of publicity given to many of the benefits available, as of right to senior citizens. The speakers emphasised that this resulted in many benefits readily available not being taken up through lack of knowledge in the senior citizens community. Justin Glass highlighted in particular the lack of take up by senior citizens of Attendance Allowance, a completely non means tested benefit which has transformed the lives of many older folk. Justin forcefully made the point that this benefit was still not claimed by many senior citizens who were clearly entitled to receive it. David Borrowman made a similar point, advising the audience of the generous legal aid available to pensioners in Scotland and yet not known to many. David pointed out to the audience that Wills, Powers of Attorney and Living Wills could all be completed under legal aid and that according to the Scottish Legal Aid Board probably 80% of pensioners would qualify for financial help in preparing them.
Margo MacDonald delighted the audience with an interesting speech, in which she mischievously passed on some of her inside knowledge of leading politicians and the running of the current election campaign.
George Henderson OBE, called on all present to support the Pensioners Manifesto of the National Pensioners Convention and urged delegates to challenge all candidates in the election on the issues contained in the manifesto.
The gathering stimulated some spirited discussion on the issues affecting older people and many of the delegates left the conference resolved to make campaigning politicians aware of their views.
"Too many people missing out on legal aid for guardianships"
12/04/2010
Is the view of Caesar and Howie family law expert Martin Monaghan, who is frustrated by the lack of publicity, given to this aspect of the Scottish legal aid system.
“Where a family member becomes incapacitated, many families have to have someone appointed as guardian to look after the affairs of the incapacitated person. It is not widely known that The Scottish Legal Aid system is very generous when it comes to granting legal aid for guardianships. The vast majority of persons in need of guardianship are entitled to free legal aid and if a welfare appointment is sought at the same time, this is without any financial test or qualification. This legal aid will pay for all of the costs incurred in applying for guardianship and intervention to deal with the welfare, assets and income of the person who is incapacitated.
Whilst I think that is a great system and one we should be proud of in this county, I think not enough people know about this entitlement. Many thousands of pounds can be saved by using a solicitor geared up for legal aid for a guardianship action. What’s even better is that there is virtually no delay in legal aid being granted in these cases – so no time is lost”.
THE CARE COST CHALLENGE FOR FAMILIES
12/04/2010
Sarah Patrick, partner at Caesar and Howie poses four questions she feels Scottish families should be able to answer. The questions are First, How much does residential care cost in Scotland? Second, Could you afford to pay for a family member going into care? Third, How many houses are sold each year to pay for care costs? Fourth, Is there any way of avoiding care costs?
Sadly, Sarah thinks many Scots families do not know the answer to these questions – nor do they even think about them. “Actually the answers are quite scary” says Sarah. “Residential care costs can exceed £600 per week and to be honest I do not think many families can afford to pay for that without selling assets. In fact it is estimated that thousands of houses are sold in the UK each year which I think should be a worry for families. But, the good news is in answer to the fourth question, there is at the moment a method available which has a good chance of stopping houses being sold to pay for care costs. It is called a Discretionary Family Trust and we are finding that once families apply their minds to this difficult subject more and more are seeking to mitigate the effects of having to pay for care. These trusts are therefore becoming more common. Setting up a family trust early - before care costs are being incurred is what needs to be done. I would urge all families with elderly members to think about this subject and plan for the future”.
For a completely free consultation on the legal issues about care costs please telephone
0845 855 3300
And ask for Sarah, Lesley or Martin
Planning Ahead for Care Costs
09/03/10
Most of us tend to feel we are “indestructible” and we tend not to plan ahead for adverse life events. But thinking “It will never happen to me” isn’t a good reason for not taking basic steps to protect families and assets against adverse events occurring.
One issue which is affecting more and more families is the cost of residential care in old age. Care costs can come in at around £600 per week nowadays. Now that might represent extremely good value in that the care home resident is being fed, kept warm and being well looked after. All the costs of living at home have gone, of course, and that has to be borne in mind.
Still it is true that good value or not these costs are substantial – probably more than the cost of sending someone to an expensive boarding school. Not many of us could afford to send a family member to a boarding school – it would just be a non – starter financially. However, many families like it or not will have to face the fact that a family member may have to go into care and the money for that will have to come from somewhere.
That “somewhere “is often the property of the resident going into care and for many that means the person’s house. It is estimated that thousands of homes are sold to pay care home costs every year.
It seems a great pity that every year many families run into a care costs nightmare when with some forward planning this can be avoided. One method which can sometimes avoid a home being sold to pay for care costs is for the house to be placed in a Trust – variously called a Family Trust or Discretionary Trust or Asset Protection Trust. There are various potential advantages to a property being put into trust, and provided such a trust is not solely set up just to avoid care costs it is likely to work in doing just that.
The word “trust” sometimes scares people but the concept is actually quite simple. Basically the ownership of assets is vested in a group of people, “the trustees”, who hold and administer property and assets for “beneficiaries” under the trust.
One effect of these family trusts is that the assets in the trust should not be taken into account when a person is assessed for how much he or she must pay towards care costs. Consequently if someone has successfully put their house in a family trust it will not be sold to pay for care costs. Apart from trusts, depending on family circumstances there are other options also which may do the trick in avoiding care costs. There are lots of issues to be dealt with carefully here and it is vital that advice is taken.
Forward planning is required and decisions on a family trust or other options must be taken long before care costs are in contemplation. It is odd that, with care costs being so devastatingly expensive for most families and with illness and infirmity hitting not just the wealthy, more families do not take early steps to deal with the care costs issue.
Caesar and Howie offer a free consultation on care costs, discretionary trusts, and other relevant issues. Simply telephone 01506 815900 and ask to speak to Sarah Patrick or Ivor Klayman.