Ask the Expert: My dad has dementia - how can I protect his money from £1,000-a-week care fees?
- Credit: Archant © 2006
Reports of sky-high care fees can cause concern for relatives - but there are ways to manage the costs, writes Carl Lamb of Almary Green.
My dad has dementia and his condition has deteriorated recently. Sadly it's probably time he had full time care in a care home. My mum died about five years ago, so we will probably have to sell the house to pay for his care – I think it's worth about £180,000. He has £20,000 in other savings and a small pension that brings in about £5,000 a year on top of his state pension (he's aged 72). I've heard care costs around £1,000 a week so his money will not last long. He was proud that he would be leaving something behind for my brother and me after his death: what can I do to prevent it all disappearing? I have Power of Attorney over his money so can I give some of the money to myself and my brother now?
I'm so sorry to hear about your dad. Deciding to move him into care can't be an easy decision and money worries won't help. Let me deal with your second question first: it isn't advisable to give money away to avoid paying care fees. When assessing your father's finances to see if he's eligible for financial support, your local authority may well consider any gifts made now to be 'deliberate deprivation of assets' and may count the amount given away as part of his overall wealth.
You can make gifts on his behalf as his attorney, but they must follow the kind of gifting pattern that he has established in the past.
The reported fees of £1,000 a week you have heard are the average across the UK for nursing and residential care combined. If your dad doesn't need nursing care, average fees are around £700 a week – so not quite so bad, but your dad's current assets may be significantly depleted. You can ringfence the amount that will go to pay care fees by purchasing a care fees annuity that will provide a top-up to his income to meet the cost of care. This is usually tax-efficient as it is normally paid direct to the care home rather than your dad, so not taxed as income. It will require a substantial sum to purchase the plan, but it will limit the total spent on his care. Talk to a financial adviser.
If you're not ready to sell his house yet, local authorities are now obliged to offer what is known as a deferred payment agreement, whereby the council pay your dad's care fees until either the property is sold, or until he dies – whichever is soonest – when the amount will have to be repaid, along with associated charges.