Dementia is a general term which describes a range of progressive conditions which affect the brain. Alzheimer’s disease is the most common. There are 850,000 people with dementia in the UK, a number which is set to rise to over a million by 2025. The vast majority of people who are diagnosed are over the age of 65.
Dementia is often associated with memory loss. While this can be one of the symptoms, there are also many others including reduced ability to perform everyday tasks and make decisions. Managing financial and legal affairs is one area which can become difficult as the condition progresses.
In this blog, we look in more detail at the key financial matters to consider when planning a future with dementia. Please note, the information applies to England and Wales only.
Why plan ahead?
At the time of diagnosis, a person living with dementia may still be able to make decisions about their finances, health and welfare. But as the symptoms get worse, this is likely to change and eventually they may not be able to make important decisions in their best interests. This is known as lacking “mental capacity”.
One of the things you can do before your condition progresses is appoint a person you trust to act on your behalf when making important decisions about your finances and care in the future. Many people find it reassuring to know this arrangement has been put in place. You can also look at the options for your future care needs and discuss them with your family while you are still able to do so. This can help to ease any worries you have about your wishes not being followed when you lack mental capacity to express them yourself.
The key financial matters to think about as soon as possible are Lasting Power of Attorney, your will, your entitlement to state benefits and your future care costs.
Set up Lasting Power of Attorney (LPA)
This is a legal document which gives another adult the authority to make certain decisions for you. This person is your “attorney”. You can appoint more than one but you must decide whether they will make decisions jointly or separately. People often assume that a spouse or civil partner would automatically be able to act on their behalf in financial and healthcare decisions but in fact, LPA is still required.
If you don’t make an LPA and become unable to make decisions yourself, there will be no one who can legally act on your behalf. This means your family won’t be able to make decisions about your care or help with your financial affairs. They can apply to become a “deputy” which gives similar powers to that of an attorney but involves a more time-consuming and expensive process.
It is a legal requirement that you have mental capacity when you set up your LPA. This is why it should be done as soon as possible after a dementia diagnosis.
There are two types of LPA. One covers property and financial affairs and the other is for health and welfare. You can arrange both at the same time or just one. You can choose the same person or people to be your attorney for both, or opt for different attorneys for each LPA.
Property and financial LPA
This gives your attorney the power to make decisions such as:
- Managing bank or building society accounts
- Paying household bills
- Collecting benefits or pension payments
- Selling your home
Property LPAs must be registered with the Office of the Public Guardian. It is then in place for when you are no longer able to make decisions for yourself. But it can also be used, with your permission, even if you are still able to deal with these things yourself. This can be a relief for many people with dementia who are able to make everyday decisions but struggle with bigger ones.
Health and welfare LPA
This gives your attorney the power to make decisions about:
- Your daily routine including washing, dressing and eating
- Your medical care
- Moving you into a care home
- Life sustaining treatment, although an “advance decision” would overrule this
Health and welfare LPAs must also be registered with the Office of the Public Guardian and can only be used when you are no longer able to make your own decisions.
How to register your LPA
You can apply online via gov.uk for both types of LPA or download and print off the forms. They must be signed by someone other than your proposed attorney to confirm you have mental capacity. The forms also need to be witnessed before being registered, a process which can take several weeks.
Make or review your will
This is a legal document in which you set out what should happen to your money, property and possessions after your death. A person living with dementia can still make a will or change an existing one, provided they do it voluntarily and are of “sound mind”. For a will to be legally valid, it must be made in writing, signed in the presence of two witnesses and signed by the witnesses in your presence. Your witnesses must be over 18 and neither they nor their spouses can be named as beneficiaries.
It is advisable to consult a specialist wills solicitor unless your affairs are extremely straightforward. Once it is signed and witnessed, keep your will in a safe place, either at home or with your solicitor. If you keep it at home, make sure you tell someone where it is so you don’t have to worry about forgetting at a later stage.
It is good practice to review your will every five years, as well as after any major changes in your life such as marriage, divorce or moving house. The only way you can change your will is by making an official alteration known as a codicil. You must sign a codicil and get it witnessed using the same process as mentioned above.
Check your entitlement to benefits
There are a range of benefits that a person living with dementia may be entitled to. Some of these are means-tested and others are based on National Insurance contributions or health care needs.
For example, if you are over state pension age and need extra help at home because of dementia, you may be able to claim Attendance Allowance. This benefit is not means-tested so it doesn’t matter whether you have an income or savings. If you are awarded Attendance Allowance, you may also become entitled to other benefits such as Pension Credit, Housing Benefit or Council Tax Reduction.
If someone cares for you, they may also be able to claim carers’ benefits.
Plan for future care costs
Many people with dementia reach a point where they need to be looked after by someone else, either at home or in a care home. You will generally be expected to contribute to the cost of this care and it can be expensive, so it is worth reviewing your financial position as soon as possible.
The first step is to arrange a care needs assessment with your local council which will determine whether you are eligible for support. This assessment is free of charge regardless of your income or savings.
Your council could then decide that you need a care service to support you at home. Most councils will charge you for this. They should work out how much you can afford to pay so you are left with a reasonable income. You may also be able to arrange your own home care funded by payments direct to you from the council.
If your care needs assessment finds that you need residential care, the council will then carry out a means test to see how much you can afford to contribute. This will take into account the value of any property you own as well as your income and savings. If this adds up to more than £23,250, you’re likely to have to pay the full care home fees.
There are a number of organisations which offer more information and support on living with dementia. Most have a wide range of resources on their websites as well as telephone helplines and the option for printed guides. These include the NHS, Age UK, Dementia UK and the Alzheimer’s Society.
(URLS for hyperlinks in above par)
Sources: NHS, gov.uk, Age UK, Alzheimer’s Society, Dementia UK