Financial Stuff and Dementia

Discussion in 'ARCHIVE FORUM: Support discussions' started by Margaret W, Jul 16, 2007.

  1. Margaret W

    Margaret W Registered User

    Apr 28, 2007
    3,725
    North Derbyshire
    #1 Margaret W, Jul 16, 2007
    Last edited by a moderator: Jul 17, 2007
    Hi all.

    Just to introduce myself. I'm an Accountant, but before you get too excited I am very rusty on lots of areas, having been out of practice for a long time, and definitely do not hold myself out to be an expert. [Some words deleted by Bruce]

    I imagine there will be others on this site with more knowledge than me, so please add to this thread and feel free to correct me.

    My mum has just been diagnosed with AD, I am now realising the financial implications, so here is what I understand so far. I am new to this, just trying to do my best for all.

    1. In my local authority a diagnosis of Alzheimers means that council tax is cancelled. Also qualifying for Attendance Allowance does the same. So find out if your council has that criteria and apply for it. In my area it is called "Council Tax Disregard".

    2. Apply for Attendance Allowance pronto if your relative has dementia, Alzheimers or related illness. No guarantees, but I applied online on Friday and got a phone call today to say mum was more than likely eligible for it. She won't get it while she is in hospital (apart from 4 weeks, so not to be ignored at £64.50 a week), but once she is "eligible" it might open the doors for other support.

    3. Paying for care in a hospital/care home/nursing home. If your loved one has little savings (below about £21,500 but it varies) and doesn't own their own home, they will probably get care fees paid for them. Care in an NHS hospital is free. Care in a nursing home could possibly be free if the patient is there because they primarily need nursing care. I am not experienced enough to say what that is. Care in a Care home is a bit of a problem, some could be classed as nursing care, but probably most is not or is a mixture of nursing and general care, so if your loved one is classed as having to pay, they will probably not get financial support.

    STOP PRESS. THIS WEEK'S EDITION ON RADIO 4 OF MONEY BOX LIVE WAS ALL ABOUT FINANCING IN CARE HOMES ETC. LISTEN TO IT AGAIN ON SATURDAY 12 NOON, OR VIEW THE TRANSCRIPT ON THE INTERNET IN A COUPLE OF DAYS.

    4. If your loved one owns their own home and another family relative (often a spouse) still lives there, it would not normally be counted as part of their assets, so you might get full financial support for the ill person. If there is no other family relative (dependent) living in the home, its value is likely to count a part of their capital, and they will have to pay towards their care. HOWEVER, that doesn't mean you have to sell the house. New regulations come in in October but I haven't yet sussed them out. Will post again when I have had time. But one possibility is that you keep the house and the Care Home builds up a debt, and when the house is eventually sold, the proceeds are used to pay off the debt. You might ask what use is that, but if the value of houses continues to rise, a house that you currently have valued at £150,000 might fund 4 years care at todays prices plus inflation, a house still owned in 4 years might give an extra 1 or 2 years care due to it having increased in price.

    But you could consider renting out the house rather than selling, and using the income to partially fund the relative's care. You would pay tax on the rental profits (but you'd probably pay tax on the interest in the bank on the sale of the house), and remember that an elderley person gets a higher tax-free allowance than most of us working-age people. But if you rented it out, you'd also benefit from any increase in the price of houses by the time you come to sell it.

    I'm no expert, these are just things to think about.

    Renting out property incurs either cost or hassle, or both. Tenants can be good or bad. They can default (i.e. not pay), they can cause damage. If you manage the rental yourself you need to collect rents, perhaps sort out repairs, but if you use an agent they will do this for you, but charge a fee. Renting a house out usually means you have to provide a good standard of decor and furniture (if provided), which might cost you money. Nobody in their right mind would want to rent my mother's house in its present state. The rooms are all 1950s style, the central heating is 40 years old (bloody good system, I would say, installed by my dad and his mate Walt), but not efficient any more.

    Think carefully about renting out a property, it can be fraught with worry.

    There is a lot of stuff on the media at the moment about switching a jointly-owned property from being "Joint Tenants" which most married couples are to being "Tenants in Common". Apparently the latter is better when it comes to talking about Care Homes, but I haven't had time to scrutinise the difference and I am currently not convinced that the difference is relevant for most people. But please do satisfy yourselves of this, and don't rely on me, cos I am not yet sure.

    5. Wills. No expert. People tell me to write wills "in trust" for other family members. It seems to me to be a thing to seriously consider, but I do not understand the ins and outs of it.

    Basic principles. When a person leaves their estate to their spouse, there is no Inheritance Tax to pay at all. The problem may come when one spouse has died and the living spouse owns the house and all the bank accounts and investments. If these total less than £300,000, or even a bit over, don't worry. But if they total considerably more than that, then when the second spouse dies (and typically leaves the estate to their children or anyone else), there will be inheritance tax to pay, at 40% on the excess over £300,000. So if the estate is, say, £500,000, the Inheritance Tax would be 40% of £200,000, i.e. £80,000.

    Some people might say, fair enough. The beneficiaries are getting all that money for no effort on their part, so why shouldn't they pay £80,000 in tax? Some might say it is disgraceful that you can't leave your assets to your children without paying tax. I am not getting into that argument. There are all sorts of things you can do to avoid paying this tax, all legal. Some involve putting the assets into a trust, and if you thing this is for you, please do consult a solicitor who is experienced in trusts. An ordinary local solititor will not do. You need a specialist. Yes, it will cost more, but might be worth it. [words deleted by Bruce]
    Another possibility is that when the first spouse dies, having left everying to the second spouse, you can execute a "Deed of Variation", which means the second spouse agrees not to take all the assets themselves, but some of them go to the children instead. This means that when the second spouse dies they don't own so much in their own right, so less tax is payable.

    But all of the above needs advice from a solicitor who is experienced in Inheritance Tax. I am not. I can only tell you what the possibilities are and how to seek further help.

    Hope the above is helpful. [words deleted by Bruce]Love to you all

    Margaret

    [Margaret's post has been edited by Bruce - simply to change some of the wording.

    While members such as Margaret have some knowledge of specific areas, there are no experts in anything [other than their own situation] on TP, and we always recommend that members take independent advice on all matters, as well as taking on board information presented by other members.

    We furthermore suggest that any advice sought here is done in public, as far as that may be possible, in order that other members may provide alternative views. The power of TP is to provide a variety of views, such that members are aware of many things that are hopefully relevant.]
     
  2. Margaret W

    Margaret W Registered User

    Apr 28, 2007
    3,725
    North Derbyshire
    #2 Margaret W, Jul 17, 2007
    Last edited by a moderator: Jul 17, 2007
    Just posted a reply to myself!

    Another thought is for those who need to consult a professional - don't forget the Capital Gains aspects. If you own a property which is not your main residence (e.g. you might be a son or daughter), there will be Capital Gains Tax to pay on any increase in value from the time you acquire it to the time you dispose of it/

    There are ways around this too, but you need a financial advisor [words deleted by Bruce].

    Love again

    Margaret
     
  3. Westie

    Westie Registered User

    Tenants in common

    Margaret, thanks for all that information. I have 2 more points to add.

    1 - Carer's Allowance. Once someone is entitled to Attendance Allowance or Disability Living Alllowance the main carer can claim Carer's Allowance provided they do not work full time. There are strict conditions regarding how much you are permitted to earn whilst receiving the Allowance, but it is well worth looking into. (I work part time and earn approx £3,000 p.a. and qualify). Must remember that Carer's Allowance counts as taxable income and will need to be declared if a tax payer.

    2 - Tenants in Common. I have just changed ownership of our property after legal advice. This has been done to mitigate the amount that the Local Authority can claim if my husband needs future residential care and he is not fully self funded. As you say, providing a spouse lives in the main property, that property is disregarded as an asset when assessing for financial contribution. Problem comes if the spouse dies before the person needing care. Usually that means property is transferred to sole ownership and is then liable to be counted as an asset, potentially forcing a sale. But as Tenants in Common, each spouse owns a half share and can deal separately with their half in a will. I have left my half of property to my children rather than my husband which means that should I have an unfortunate accident, they still have some assets which cannot be touched rather than the whole lot being swallowed up with nursing care fees. Of course, should I outlive my husband (expected scenario) then it makes no difference if property was joint tenants or tenants in common. Also if a person is fully self funding their care, it doesn't matter about ownership.

    Bit of a long winded explanation but I hope this helps some of you. Seems most relevant to younger carers who are spouses and who have children.

    Whilst I have tried to faithfully repeat here the information I was told, please seek your own legal advice as well. Complicated subject!!
     
  4. Brucie

    Brucie Registered User

    Jan 31, 2004
    12,413
    near London
    Hi Margaret

    firstly, sorry to have had to amend some of your wording above - I have explained why in my PM to you.

    Regarding your first post, above, my understanding that there is a 25% disregard on Council Tax for someone diagnosed with dementia. That at least is true in the areas where I have lived. Other areas may vary that - so the advice is always to check with your own local authority.

    Regarding Tenants in Common - the situation is totally dependent on the particular circumstances of a family. In our case, I made the change for very specific reasons [actually to ensure that if I go under a bus and Jan is still around, that my estate will not go to her family on her passing].

    All these things are valuable to be flagged up as needing checking, but there is rarely a black and white answer that covers all cases.

    Thanks for posting in the first place - it is useful to have all these points raised in a single place. :)
     
  5. Grannie G

    Grannie G Volunteer Moderator

    Apr 3, 2006
    68,659
    Kent
    Sorry, Westie, this is inaccurate.

    Carer`s Allowance is means tested for those who have retired as well as those who are still working.
     
  6. Norman

    Norman Registered User

    Oct 9, 2003
    4,348
    Birmingham Hades
    Correct Bruce 25% reduction community tax .for single occupant.
    They have already notified me.
    As you say no two people are the same,My will was divided and a trust set up for the grandchildren should I go first,with the proviso the trust could be used to pay for Peg's care.
    Plenty of fact sheets on AS site.
    Norman
     
  7. BeckyJan

    BeckyJan Registered User

    Nov 28, 2005
    18,972
    Derbyshire
    Bruce beat me to this one!! It was important for us to do this in relation to IHT avoidance (legal I must add). We had a specialist solicitor which cost a lot but nothing in relation to the amount saved for our children when they evenually inherit. IHT is not just for the very rich but for those of us in the age group where property values have significantly changed.

    I think this is an important thread but I do feel circumstances vary so considerably it should only be 'food for thought'.

    Beckyjan
     
  8. Margaret W

    Margaret W Registered User

    Apr 28, 2007
    3,725
    North Derbyshire
    Council Tax

    The 25% reduction applies to persons living in a house alone. Once one menber of the household is diagnosed with either a terminal illness, or a Dementia related illness, council tax is disregarded - at least that is what applies in my local authority, I don't know if it applies nationally. If a person goes into residential or hospital care, also check out the situation regarding the Insurance on the house. Ours allow 45 days of absence for any reason without a change to the premium. If the house is unoccupied for longer, there is is a further 45 days absence without a change in premium providing the person is in hospital or residential care. After that we have no negotitate a premium, not a clue what that entails.

    But please note that I am a novice at this and please make your own enquiries and satisfy yourself of the situation with your own insurers.

    Regards

    Margaret
     
  9. Margaret W

    Margaret W Registered User

    Apr 28, 2007
    3,725
    North Derbyshire
    Inheritance Tax

    Hi all,

    It is now a minefield and anyone seeking to reduce the effects of inheritance tax is well advised to seek professional advice, and I'm afraid that your local solicitor or accountant may not be the best person. You need someone experienced in this area, and it may cost you quite a lot, but may be well worth it if you are given the right advice. I believe there is a particular qualification which financial advisers are supposed to have, can't remember its name but you wlll find it on the BBC radio 4 website under Moneybox.

    Regards

    Margaret
     
  10. Brucie

    Brucie Registered User

    Jan 31, 2004
    12,413
    near London
    I can only speak for the areas where I have lived, but this is absolutely not correct from my experience.

    From a disrgard form I pulled from the Internet at random, it seems you may have it the wrong way around - where a mentally impaired person lives alone, there is total disregard.

    Where they share the house there may be 25% disregard. http://www.highpeak.gov.uk/housing/ctax/Ctax_disregard_severely_mentally_impaired.pdf

    it may vary from place to place of course. :)
     
  11. Grannie G

    Grannie G Volunteer Moderator

    Apr 3, 2006
    68,659
    Kent
    This is what I have found Bruce.

    My mother, living by herself, did not pay Council Tax, once she was awarded Attendence Allowance.
    Hers` was a LA in the North West.

    We have been allowed a reduction of 25% on our Council Tax, form our LA in the South east.
     
  12. Norman

    Norman Registered User

    Oct 9, 2003
    4,348
    Birmingham Hades
    When Peg was with me we had 25% reduction due to there being a person resident with mental impairment.
    Now I am alone I get the 25% in my own right.
    I am no expert but I do have 13 years hands on experience of caring and the financial problems involved.
    Norman
     
  13. germain

    germain Registered User

    Jul 7, 2007
    342
    Thank You

    GOOD MORNING AND THANKS TO MARGARET FOR HER ADVICE

    I've just looked up the bits re council tax on my LA website and it seems that those regarded as severely mentally impaired could get a full disregard. As my Mum is still living alone (albeit in assisted accomodation) and we have just applied for the 24 hour rate of attendance allowance - she could qualify - will be a saving of over £60 per month which will help towards carers fees of about £150 per week minimum.

    Our LA need a confirmation of entitlement from the AA people and a certificate of severe mental impairment from the GP or doctor ( will possibly try the Alz. consultant for this. )

    Went to an assessment last Tuesday and Mums scores are now down to 15 - quite a drop from 21 scored 6 months ago. Not a total surprise as Mum has been severely neglecting herself (forcing the move) and has been in hospital with dehydration and UTI etc)


    And on a positive note - and a glimmer of hope for those agonising over moving relatives away from their own homes - although we thought it would be heartbreaking for Mum to move and we absolutely tore ourselves apart over the decision - she has settled really well and seems to be much more serene - the security of living somewhere where she has carers popping in all the time and a warm safe place to live seems to have affected her mood (and ours) in a really positive way. Its also really lovely for us to visit and find her washed and clean (not smelling of urine all the time) , well fed and warm.
    We still visit daily but now its not such a strain - its much nicer to be able to visit the "person" rather than to be worried about what we would find and what awful chores needed doing ((don't mean to sound so selfish there but sometimes the toilet and personal cleaning was soooo bad - you'll all mostly know what I mean)

    Will let all know how get on - am filling in the forms today .

    Thanks again Margaret.
     
  14. Margarita

    Margarita Registered User

    Feb 17, 2006
    10,824
    london
    #14 Margarita, Jul 21, 2007
    Last edited: Jul 21, 2007
    Yes it is all very complicated about this disregard

    I was told if all family member in a house hold where student they would be all be disregard of all council tax also , but if one person is working , in that house hold then would have to pay full council tax , but they would be a reduction if they was also was a mentally impaired person living in that household also .

    If in a household the person was living alone and not mentally impaired they would be a reduction , called single adult earner, working or is of pension age and not working

    If they are mentally impaired they would be totally disregard of council tax , if they live alone
     
  15. sue38

    sue38 Registered User

    Mar 6, 2007
    10,856
    Wigan, Lancs
    Council tax

    I have just looked at the web site for the Council where my mum and dad live and it appears the following rules apply:-

    1. Where one of the persons living in the house is 'severely mentally impaired' they will be discounted when assessing how many adults live in the house. If they are the only person living in the house, the house is exempt.

    2. Where one of the persons living in the house qualifies as a carer they too will be discounted, but different rules apply, in that they will only be entitled to a 50 % discount.

    So in my Mum and Dad's case if we were able to show that my Dad is severely mentally impaired and that my Mum is his carer, they would qualify for a 50% discount.

    I suspect that this is one area where the Local Authority can make their own rules and it may vary around the country.
     
  16. Brucie

    Brucie Registered User

    Jan 31, 2004
    12,413
    near London
    All the replies show how important it is to qualify anything that applies in any particular area.

    Nothing seems to be universal, and the postcode rules, it seems.
     
  17. Lynne

    Lynne Registered User

    Jun 3, 2005
    3,433
    Suffolk,England
    Tenants in Common ...

    When my Mum was diagnosed with AD, I moved in with her. So far she is only mildly affected (compared to others) & receives no outside assistance other than 1 day per week local daycare. Does anyone know whether 'Tenant in Common' status would give me any security of tenure? Her home is my home now, I have no other property.
     
  18. sue38

    sue38 Registered User

    Mar 6, 2007
    10,856
    Wigan, Lancs
    Lynne,

    Is the house in your Mum's sole name? If so and she were to transfer half the house to you now, whether as joint tenants or tenants in common, there is a danger that she would be regarded as deliberately depriving herself of assets (i.e. half the house).

    It would also depend on your age as to whether the house would be disregarded when assessing your mum's capital.

    There is a lot of talk about 'tenants in common' at the moment both on TP and in the press, as though it's some new wonder device.

    In England and Wales there are basically two ways of owning property jointly (assuming 2 co-owners but can be more):-

    1. Joint tenants. Both of you own the whole and on the death of the first of you, your share automatically passes to the surviving owner(s), even where you have made a will gifting your share in the property elsewhere. Also in this way the ownership is 50-50. You can change to tenants in common by 'severing the joint tenancy' and the easiest way to do this is by serving a notice on your co-owner.

    2. Tenants in common. Each of you owns your own share. (not to say that one has the upstairs and one has the downstairs but you have your own distinct share of the value). This may be 50-50 or 60-40, 70-30 etc. When the first of you dies your share will not automatically pass to the survivior but will pass under the terms of your will, or if you have not made a will according the laws of intestacy.

    So if you have a couple living in a house which they own jointly they may wish to make sure they own the house as tenants in common and make wills leaving their share e.g. to the children, so that say if wife goes in to a home the value of the house will be disregarded so long as spouse still living in the house. If husband dies the wife's share of the house will then be included when assessing her capital, but her late husband's share will not pass to her and will not be included.

    Also it may be useful for avoiding Inheritance tax to leave a share in the house to the children and for that reason you will have to own the property as tenants in common.

    Does this help or is it now clear as mud? :)
     
  19. Lynne

    Lynne Registered User

    Jun 3, 2005
    3,433
    Suffolk,England
    Sue,

    Thank you for your response. I don't want to Hijack the thread, but would appreciate your input (perhaps by PM - would that be best Bruce?)

    OK, a few more details: Mum is 88, I am 57 (designated retirement year 2010) BUT I was made redundant last year & have not worked since. Mum gets Attendance Allowance, I get Carer's Allowance + Income Support.

    My 'Plan' was to get a job nearer home - previously I worked 45 miles away - so that I could pop home lunchtimes etc. However, Mum fell & broke her arm last year, therefore needing 1-on-1 care much sooner than I had anticipated and, during a complicated & difficult recovery, has become much more reliant on me doing things for her than was previously the case. Part of this could be the natural course of the AD of course.

    House is in Mum's sole name (2-bed Bung., value approx £160K)
    An Enduring Power of Attorney has been drawn up & completed, but NOT yet registered.

    Grateful for your interest ...
     
  20. Brucie

    Brucie Registered User

    Jan 31, 2004
    12,413
    near London
    Hi Lynne

    Two things to ponder.

    Firstly thread hijacking... no reason why you shouldn't create a new thread on your topic - or I could move this post into a new thread for you.

    Secondly, responses. That is your call really.

    If you want a selection of generic answers to mull over, then public posts are always preferable. If you want to get deep and personal in your discussions - and if you feel you know a member well enough to do that by PM - then that might be an idea.

    For my part, in your place I'd stay public and try an pose your situation in slightly anonymous terms.
     

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