Why can't we pay first party top ups? (Wales)

[Jools1402]

Hi All, Mum is 97 with advanced heart disease and Alzheimer's. She has been in a brilliant care home for the last 18 months self funding. We are now at the point of having to ask social services to step in with funding. They have agreed that Mum needs to be in residential EMI care and have offered a sum of £790 to fund this (obviously Mum will contribute her pension and pension credit to the LA). Unfortunately this sum is about £300 per week short of what is needed to keep her where she is. We desperately want her to stay where she is - we feel moving her to a new environment (even if it's just as good as where she is now - which I would very much doubt) will be very detrimental to her. She is very frail now and deteriorating both physically and mentally quite rapidly. It is Mum's wish that she stays where she is.
I was asked by the social worker if the family would be prepared to top up - I said yes as I thought this could be paid out of Mum's £50K which she is allowed to keep (this is Wales). I have POA. My brothers and I are in full agreement about all of this. Since coming on this forum I have learnt that this is not allowed and as a family no one has funds to make such a large third party top up. It's ridiculous! Why shouldn't Mum use her own money to live out what short time she now has left in a home that she knows, that care about her, that she has friends in? What else is this £50K for? She's never going to be buying a property or a sports car or travelling to the Maldives.
So - what is the reason we not allowed to make first party top ups? - other than it's the stupid law!

 

[Kevinl]

I don't know but £790 isn't a lot in many parts of the UK. Might be social services are bulk purchasers of care, so "bigger pack, better value" as they say.
As you say the law is an ass, and a pain, but it is the law although it does vary by country in the UK, England seems to come out bottom on most things when it comes to care. K

 

[Jools1402]

Thanks for answering @Kevinl All we want is for Mum to live out her last days in comfort. She has funds to do this but not allowed to use them for this. My brothers were incredulous when I told them that our financial plan for Mum was a no go.
Mum was discharged from hospital on a D2A bed in a "cheap" home - it was absolute carnage. The memory service nurse told me we had to get Mum out of there as soon as we possibly could as her anxiety levels were through the roof. We did - to the lovely home she is in now. As you say - £790 is not a lot - so I'm feeling the home that SS has found that will accept this amount will be very basic and crowded and probably in the middle of Wales miles from family and friends.

 

[SAP]

It’s the stupid law I’m afraid! The regulations are different in Wales, in England a person stops paying full care at £23,500 but can make a contribution and then makes no contribution other than pensions and benefits at approx £14,000. I guess the argument is that not all of a persons savings will be used up in care fees. What you say makes perfect sense but bureaucracy is standing in your way.

 

[Kevinl]

In England bottom disregarded figure is less than half the one in Wales, and as I post SAP just beat me to it with the figures. K

 

[Jools1402]

All that will happen with Mum's £50K is that my brothers and I will inherit it - but until she dies she is just going to have to "rough it" unless we can find another way - but I doubt it. The care home she is in now is trying to get SS to pay their full fee by saying that Mum is too frail to move - which she is. She was initially assessed for this by SW in February - she has declined a lot since then.

 

[Dave63]

In England if a move would be severly detrimental to either the physical or mental wellbeing of a person then the local authority must consider the option of not moving that person and funding the additional amount for them to remain in their current care home. It may be the same in Wales? Speak with the social worker and emphasise your concern that any move would have serious implications for your mum. May be try and get the care home on side so they can advocate for your mum as well?

 

[Jools1402]

Hi @Dave63 The care home are absolutely onside and chasing SS themselves. I will contact Mum's SW this week to again express my concerns and ask that they reassess her. Mum is now down to the threshold for SS to be paying and I feel this is brinkmanship on their part. Very worried as to where Mum will end up.
Such a STUPID rule

 

[Kevinl]

They can do a "discretionary disregard" and pay, if the want to (social services that is) and pay the full fee to keep her where she is and pay over their usual figure, work with them if they like you it can be easier. K

 

[Dave63]

It is stupid.

Do a bit of googling over the bank holiday to see if you can find out what the rules are regarding a local authority forcing a move from a persons current care home.

As I say, in England the LA has a legal duty to consider the option of the person remaining where they are if a move would be detrimental. Their decision can not be based on cost alone.

 

[nitram]

I hope everybody eager for the delayed introduction of the £k86 cap on care spending realises that the package also includes a change to upper and lower capital limits of £k100 and £k20.

Leaving inheritance is fine, the problem is LAs can't afford care fees and have to ask for voluntary third party top ups

 

[Jools1402]

I have a good relationship with Mum's SW and I'm a firm believer in trying to work with people

They can do a "discretionary disregard" and pay, if the want to (social services that is) and pay the full fee to keep her where she is and pay over their usual figure, work with them if they like you it can be easier. K

 

[Jools1402]

Leaving inheritance is fine, the problem is LAs can't afford care fees and have to ask for voluntary third party top ups

This is why the rule against first party top ups is so stupid. Either Mum will have to be moved to a cheap home (she loses) or the LA will have to pay more (they lose)

 

[Hours Away]

I've just had an idea and maybe someone with more legal knowledge than me might be able to comment whether or not this might be a possible workaround to the whole first party top up issue.

Are you the only POA? If so I wonder if this creates a possible way around this if at least one of your brothers isn't and you are all in agreement.

Could your mother (via you as POA) loan one or both of your brothers the shortfall needed? The loan debt being owed to her estate when she passes.

One or both of them could then sign the top up paperwork (I'm assuming then it wouldn't count as a first party top up but I could be completely wrong about this) and you as her POA could transfer one or both of them the funds on a monthly basis for them to then pay the top up fee.

When your mother passes instead of £50k in her account there could be say £30k plus say a £20k loan which your brother(s) would owe, having spent £20k on top ups in the interim.

Assuming the total top up payments wouldn't exceed £50k they wouldn't actually need to pay any this back at any point but it could be evened out between the 3 of you from the residue of her estate.

In this example there would be £30k/3 - £10k per person left to inherit.

Legally there would still be £50k/3 - £16,666 per person of which your brothers would receive £16,666-the £10k owed by each of them so £6,666 and you'd get £16,666 but assuming you'd agreed to fairly equalise things and you "reallocated" each of them £3,333 from your share you'd all still end up with £10k.

 

[Jools1402]

Thank you for your reply @Hours Away - so nice to have so many helpful people here. One of my brothers is also POA. The other brother came up with a similar scheme to yours except that he proposed gifting us all out of Mum's money and then us paying third party top ups.
My only - and I think real - reservation is that as I understand it my role as Mum's attorney is to administer her money as she would normally herself have done if she were still able. This sort of scheme would be very different for her and might be considered to be wrong by the COP.
It is certainly making legal enquiries about if all else fails - thank you

 

[nitram]

Could your mother (via you as POA) loan one or both of your brothers the shortfall needed? The loan debt being owed to her estate when she passes.

Loan would have to approved by OPG and at commercial rate, it would have to be affordable and in mother's best (financial?) interests.
The £300/wk interest to fund top up would have to be declared to HMRC.

 

[Kevinl]

Being the holder of a PoA you're not allowed to benefit financially, does this include after death. Who knows. K

 

[nitram]

Being the holder of a PoA you're not allowed to benefit financially, does this include after death. Who knows. K

POA ceases on death, ex POA can be beneficiary.

 

[Jools1402]

A loan of £50K would not generate anywhere near enough interest to pay the top up fee. Capital would have to be used so my brother who was "loaned" the £50K would not have £50k left to repay Mum's estate. I don't think this will work at all I'm afraid

 

[Hours Away]

I've just checked my POA, which was drawn up by a solicitor, and one of my powers was to "grant personal and secured loans".

On the OPG website I've found the reference here where it states you must apply to the Court of Protection for.. interest free loans

Lasting power of attorney: acting as an attorney

Acting as an attorney - duties, including registering a lasting power, starting to act, gifting, handling disputes and replacement attorney responsibilities.

www.gov.uk

I also found Example 2.1 here which wouldn't be relevant as a POA isn't loaning themself the money

OPG2: Giving gifts for someone else (web version)

www.gov.uk

If you added some element of interest to the loan (even a nominal £1 per annum to avoid a complicated calculation) you'd avoid it being an interest free loan.
The "lost" interest would be classed as a gift but it's a relatively small amount anyway if the top up is £300/month, even with interest rates at 5%, so surely common sense should prevail as you can gift as POA anyway, particularly since it's not to yourself.

If one of you had the thousands in the bank needed to pay the top up you might be coming to a similar sort of arrangement anyway, in your mother's best interest.

@nitram referenced previously the potential English increase in the upper (from £23,250 to £100,000) and lower capital limits (from £14,250 to £20,000). The whole system is extremely confusing but does this mean that in England, if this ever becomes law, once someone's assets drop below £100,000 their families could also be faced with paying 3rd party top ups from their own pockets, or if they can't fund the top up themselves potentially having to move their elderly relative from a self funded place to a care home which accepts the local authority rate, only to inherit up to £100,000 later on?

Until the disparity between local authority funding levels and self paying costs can be addressed is there a need, given the increases in the thresholds, to allow first party top ups if all POA and potential beneficiaries in the will are in agreement that it is in the best interests of the resident?