Situation when both parents are in care home and asset division

[theplume]

Hi
Both my parents are certified mentally incapable, both having dementia. They are both in a nursing home and are self funding. I am the POA for both and sold their home. Their home was held as 'tenants in common'. I have specifically kept their assets seperate (both had their own savings), and split the proceeeds of the house sale equally between them.
My Dad has larger assets than my mum.
1) When my mothers assets fall below the threshold, will the LA expect me to use my Fathers assets to continue to pay for her care, or are they kept strictly seperate?
2) If my father dies first, does his assets automatically become available for my mother, or does that depend on how his will is written?

Thanks in advance.

 

[jenniferpa]

Hi and welcome to Talking Point.

No, once your mother's assets reduce there is no requirement for your father's assets to be used to pick up the shortfall. And yes, asset distribution after one partner dies is dependent on what the will says.

It would be different if the marital home was still jointly owned, but as you've already disposed of it, when it comes to paying for care neither of them have responsibility for the others care fees.

 

[graybags]

Interesting I'm in exactly the same position with my parents. Iam also in the process of selling the house so as to fully split the assets and protect them as far as possible. My Mum has more savings as she was obviously a more canny investor than my Dad !!

 

[Bob S]

Have both parents been assessed to see if the NHS should be funding their care?

 

[theplume]

Hi and welcome to Talking Point.

No, once your mother's assets reduce there is no requirement for your father's assets to be used to pick up the shortfall. And yes, asset distribution after one partner dies is dependent on what the will says.

It would be different if the marital home was still jointly owned, but as you've already disposed of it, when it comes to paying for care neither of them have responsibility for the others care fees.

Thank you Jennifer, confirmed my thoughts nicely.

Can anyone help with this follow on question:

20 years ago, both parents took out an Income generating Investment bond with Scottish Widows. These are still active, although they no longer take any income from the bonds. Will the LA want us to cash these in to pay for care, or can these be excluded?

 

[jenniferpa]

The information you need is contained within CRAG (which can be downloaded here http://www.dh.gov.uk/en/Publication...tions/PublicationsPolicyAndGuidance/DH_125831) but I'll duplicate it here because it looks pretty complex.

Treatment of Investment Bonds
6.003
The treatment of investment bonds in the financial assessment for residential accommodation is complex because, in part, of the differing products that are on offer. For this reason councils should seek the advice of their legal departments when they arise. However it is possible to offer some general advice and councils are referred to the Social Security Commissioners decision R (IS) 7/98 which rules that an investment bond falls within the disregard by virtue of it’s intrinsic nature as a policy of life assurance. N.B. The AOR are largely based on Income Support Regulations .
6.004
Councils are advised that if an investment bond is written as one or more life insurance policies that contain cashing-in rights by way of options for total or partial surrender, then the value of those rights has to be disregarded as a capital asset in the financial assessment for residential accommodation (see paragraph 15, schedule 10 of the Income Support (General) Regulations 1987). In contrast, the surrender value of an investment bond without life assurance is taken into account.
6.005
Income from investment bonds, with or without life assurance, is taken into account in the financial assessment for residential accommodation. Actual payments of capital by periodic instalments from investment bonds, with or without life insurance, are treated as income and taken into account provided that such payments are outstanding on the first day that the resident becomes liable to pay for his accommodation and the aggregate of the outstanding instalment, and any other capital sum not disregarded, exceed £16,000. (see also 8.015)

 

[theplume]

The information you need is contained within CRAG (which can be downloaded here http://www.dh.gov.uk/en/Publication...tions/PublicationsPolicyAndGuidance/DH_125831) but I'll duplicate it here because it looks pretty complex.

Hmm, thank you again Jennifer. I have located the policy documents. In fact they have 2 with different companies which read as follows:
Prudence Bond - The Policy is a single premium unit linked whole of life assurance contract issued by etc. The accompanying schedule reads: Sum assured 101% of the bid value of the policy. The sum assured will become payable on the death of the life assured.

Scottish Widows - Capital Investment bond, with death benefit. On the schedule it states:Grantees and life assured, <parents name>.

I am no expert, but I think these may qualify. They both appear to have life assurance and both allow total or partial surrender.

Any experts out there who can comment?

 

[jenniferpa]

I'm by no means an expert about these but from the way I read CRAG - if there is income coming out then the income should be counted, and if there isn't, but there is a life insurance component, then they are disregarded. The surrender value should only be considered if there was no life insurance component (this is because no one, LA or not, can demand you surrender a life insurance policy).

 

[theplume]

I'm by no means an expert about these but from the way I read CRAG - if there is income coming out then the income should be counted, and if there isn't, but there is a life insurance component, then they are disregarded. The surrender value should only be considered if there was no life insurance component (this is because no one, LA or not, can demand you surrender a life insurance policy).

I understand, again nicely put. A while ago, I actually rang both companies and asked them. They both said the surrender value would not be considered, but that we should check with the LA. Me, being me, likes to know the answer before asking the question

 

[jenniferpa]

A person after my own heart.

Edited to add:

FYI - when dealing with local authorities it's as well to have studied CRAG (all 121 pages, sigh). You'll be surprised (or perhaps not) how many LA staff who should have studied these guidelines haven't, or don't appear to have done.