What might a dementia patient have to pay for?

Many people want to ensure that they can leave enough money to their surviving spouse or even to be able to pass on an inheritance to their relatives. However, sometimes relatives can find themselves faced with a massive bill when the time comes, or forced to sell the family home to release equity. However, social care is not free and if your local council is arranging for care, then they will want to carry out a financial assessment to see who should be paying for it. The reality is, that you may well have to fund the care. In this article we cover in more detail what the thresholds are, any exclusions and what is termed as deprivation of assets. When it comes to financial assets it is important to get support from a financial adviser who will be able to advise what you can do to protect your assets although in practise if the person enquiring already knows that they are going to need long term care, then it is unlikely that they can do very much, other than fund the bill.

What are the thresholds?

Care funding is means tested by the council, especially when they are arranging the care home for the patient. Currently, if the total amount of income and capital is over £23,500 per annum, then the patient will be expected to cover all of the care costs. Savings and investments are taken into account, pensions and dividend payments all included. If the total income is below this amount then there may be some support available from the council. The council will include the home in their valuation of assets. They will look at the value of the property, minus any mortgage that is outstanding. They will allocate an amount of 10% from that expected value, which would cover the associated costs of selling the property. 

What are the exclusions? 

In short, a house will not have to be sold if your partner/spouse is to continue living there, unless they are now estranged from you. In addition if the dementia patient has a child under the age of 18 living in the property, or a relative who is disabled who lives in the property, then the council will not include this is the evaluation of assets that the dementia patient has.

Similarly, if the dementia patient only needs to stay in a care home for a short period of time, then the home will not be taken into account when evaluating the dementia patients assets. However, due to the nature of dementia and requirement for round the clock care in the later stages, it is something that should be prepared for, that unless a private care team is to be provided in the home, it is most likely with dementia patient will transfer to a care home at some point in the future. 

What is deprivation of assets?

The reality is, that property cannot be purposefully put into trust to avoid paying care home fees and it cannot simply be given away, for example. In addition, savings cannot be depleted in order to avoid having to pay social care fees. Even if the dementia patient were to have gifted some of their assets and property, this can still be seen as depriving themselves of assets. Now this definition only applies if at the time they knew that they would need long term care and that in giving away their property or significantly reducing their assets was intentionally done in order to avoid paying for care.

If the dementia patient elects to put their property(-ies) into trust then they must do so with the advice of a financial adviser as to what the valid reasons are for doing so, otherwise it will be taken as a deprivation of assets. It’s not just putting your property in trust either. If you give away your savings, or transfer the title deeds of the property over to someone else, this can all be seen as efforts to rid yourself of assets.  

Equity release

Some people go down the route of releasing equity from their home to help them to pay for their care. However these should all be talked through with a financial adviser as they can be expensive and they do come with risks, like any financial product. 

Summary

The earlier that long term care planning is considered and the ways in which it can be funded, the better prepared we all are, then we will be more able to cover the costs of long term care, should the need arise in the future. As with anything financial, an adviser will be able to identify what can and what shouldn’t be done and the best way to be is as transparent as possible. To see more details about what care is available in the community read our article here.

This article was created in May 2019 based on the current financial information available at the time. We shall review this article and provide an update should anything change.