Dementia and the financial implications by Glenn Barrett, Ascot Lloyd, Chartered Financial Planner
Somebody develops dementia every three minutes in the UK, according to the Alzheimer’s Society. It has a catastrophic impact on life and can cause a great amount of stress and worry for families. The coronavirus (COVID-19) has added additional stress making daily life much harder.
It can be difficult to explain to a person with dementia why they should wash their hands more frequently, or why you are trying to avoid touching them. COVID-19, the respiratory illness caused by the new coronavirus, just like dementia does not increase risk for flu. However, dementia related behaviours, increased age and common health conditions that often accompany dementia may increase risk.
There are several different ways in which your / a carer’s financial situation can be affected. The State of Caring 2014 survey found that 54% of carers struggled to pay household bills and 35% cut back on essentials like food and heating to make ends meet.
In addition to reduced work opportunities and income, there are direct financial costs to providing care. These include:
- Higher energy bills due to the family staying at home most of the day
- Specialist food
- Higher phone bills
- Higher transport costs
- Care products
- Equipment and adaptations
The Alzheimer’s Society found the typical cost to a person living with dementia is £100,000 (2017 study), though it admits for many the cost is far higher.
When a person with dementia can no longer live in the family home, you may need to consider care home costs. For those expecting to move into a private home that takes dementia patients, fees between £1,000 to £2,500 per week are not unusual.
That’s not to say there’s zero support, but financial help is limited. A local authority will pay part of the costs after means-testing patients to ensure they qualify for aid. The testing involves looking at the value of their home, their pensions, savings and investments.
Glenn Barrett, Chartered Financial Planner at Ascot Lloyd, adds:
“That threshold figure of £23,250 is per individual, and so for a couple we can ensure that their savings are split. Certain types of investments are excluded in the calculation, typically those in a single premium insurance company bond. In addition, the value of the client’s home is disregarded if they or a relative aged 60 or over, a child under the age of 18 or a disabled relative are resident in it.”
If this comes to more than £23,250, the individual is responsible for all their care costs. Dementia impairs decision-making, which is impossible to predict and tough to talk about or even admit as being a possibility. It’s vital, however, to prepare for the worst in order to protect you and your family’s future welfare.
An LPA allows friends or family of dementia sufferers to help pay for such things as their mortgage and bills, or to manage their investments. Two million people in the UK currently have an LPA on behalf of a friend or family member.
A Lasting Power of Attorney (LPA) can be a small piece in the puzzle of resolving long-term care. Admitting a close friend or family member no longer has the mental capacity to make a decision is very difficult. More information on how to discover whether someone has mental capacity can be found on the Mental Health Foundation website.
On the risks of financial errors being made by somebody suffering with dementia, Glenn told us that having a joint account to track spending is not enough. He adds:
‘Guidance from the British Bankers Association to its members is that if they become aware of an account holder’s incapacity, then a joint account should be blocked until the necessary legal authority is produced. That legal authority is a lasting power of attorney.
‘If an LPA has not been done (or an Enduring Power of Attorney written before 2007) then the family will have to go to the Court of Protection to apply for a deputyship order. This is a much longer and more expensive process. You are never too young to put these documents in place.’
Find out more about the illness by visiting the Dementia Friends Initiative. With 1 in 6 people over the age of 80 diagnosed in the UK, financial planning for later life care is an important consideration. The earlier you start that process with a qualified financial adviser, the better. If you would like advice on any of the above, please don’t hesitate to contact your financial adviser.
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