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
    Council Tax Disregard

    I was perhaps being a bit simplistic, I was only considering the situation where the person diagnosed with mental illness was the sole occupant of the house. It seems to me that most authorities would totally disregard council tax in this case. What happens if the house is occupied by others I cannot say. That said, six weeks on, and still not even an acknowledgement from my mum's local council!

    Do take heed of my post re household insurance, it does need checking with your insurer as to how long you can have the property empty while your relative is in hospital/home before the premium needs reassessing (probably upwards, as an empty house is an extra risk).

    Love to all

    Margaret
     
  2. sue38

    sue38 Registered User

    Mar 6, 2007
    10,854
    Wigan, Lancs
    Hi Lynne,

    Sorry for the delay in getting back to you but I wanted to check a couple of things.

    I will keep this on the forum as (1) it may be of help to others and (2) if I get anything wrong, someone out there will pick up on it.

    Firstly, I wouldn't transfer your mum's house either outright to you or in to joint names under an EPA.

    Secondly, the house will be disregarded when assessing your mum's capital for paying fees if it is occupied by a relative who is aged 60 years or over. (One of the few times you wish you were a few years older ;) )

    The Local Authority has the discretion to disregard the house if occupied by someone else. Para 7.007 of the Charging for Residential Accommodation Guide (CRAG) states:-

    "Where the LA considers it reasonable to do so, they can disregard the value of premises not covered in paragraphs 7.002-006 in which a third party continues to live. LAs will have to balance the use of this discretion with the need to ensure that residents with assets are not maintained at public expense. It may be reasonable, for example, to disregard a dwelling's value where it is the sole residence of someone who has given up their own home in order to care for the resident, or someone who is an elderly companion of the resident particularly if they have given up their own home.

    The link to CRAG website is : http://www.dh.gov.uk/en/Publication...tions/PublicationsPolicyAndGuidance/DH_073650
     
  3. jenniferpa

    jenniferpa Volunteer Moderator

    Jun 27, 2006
    39,437
    Margaret: re the council tax disregard. I never did get a formal acknowledgement about this, simply a rebate check for the money already paid!
     
  4. Margaret W

    Margaret W Registered User

    Apr 28, 2007
    3,725
    North Derbyshire
    Hi everyone,

    It might be a case of a little knowledge being a dangerous thing. I was just trying to help people. Anything I say on this site is to be treated as general info and professional advice should always be sought as individual circumstances can differ. And some professional advisers have knowledge of "little tricks" that I don't have.

    Anway, this week's pre-budget plans announced by the Chancellor might cause us all to think again. We can now pass on £600,000 of our estate (if a married couple or in a civil partnership) without incurring inheritance tax BUT anything you give away in the meantime will reduce the £600,000.

    I also noted some mention of help for people in care homes, but haven't found out any details yet - has anyone else? Please let us know.

    Regards

    Margaret
     
  5. Ashburton

    Ashburton Registered User

    Feb 19, 2007
    99
    Having read the thread, hope I am posting this is the right place, if I have joint savings and investments with my mum, when it comes to pay for a care home, I will physically be paying for care home, i.e. I will arrange payment, but technically is she really paying for care home. Obviously I will seek professional financial advise, but in this situation, am I paying for the care home or is it coming out of my mums part and so will be deducted for IHT.
     
  6. jenniferpa

    jenniferpa Volunteer Moderator

    Jun 27, 2006
    39,437
    As you say, you definitely need professional advice about this. However, you might want to bear in mind the advice given to spouses, which is that joint savings should be split asap. That way, only your mother's savings are being used to pay for care. Obviously you're in a rather different position to a spouse. You might (if you feel up to it) look at the CRAG guidance on the Department of health website. The bit you're interested in is (I think) beneficial interest (i.e. how much of account is deemed to be hers and how much yours).

    The link is here
    http://www.dh.gov.uk/en/Policyandgu.../Financeandplanning/Residentialcare/index.htm
     
  7. Ashburton

    Ashburton Registered User

    Feb 19, 2007
    99
    Possibly a bit late now to split up as my mum was diagnosed in 2003, as I live with my mum, expenses are pretty much joint with an either or signature required, best when it comes for time for care home to seek advise from my accountant.
     
  8. jenniferpa

    jenniferpa Volunteer Moderator

    Jun 27, 2006
    39,437
    Something to add - you would need to be more concerned if your mother's savings were likely to be insufficient to pay for all of her future nursing home bills. I suspect that the Inland Revenue would be considerably less "grabbing" that the local authority might be when it comes to it (strange thing to say but there you are). In other words, you would have less difficulty in proving to the IHT people that your mother had spent her savings on nursing care and thus fell below the threshold than you would proving to the LA that the same thing had occurred.

    P.S. I don't think diagnosis date really come in to it when it comes to "splitting" - more date of admission to care. Of course you may have other logistical problems vis a vis EPA/LPA (if you don't have one).
     
  9. Ashburton

    Ashburton Registered User

    Feb 19, 2007
    99

    Yes either of our savings will be sufficient to pay for a care home, and yes and when my mum goes into care at that date I would have to split savings. Never set up an EPA/LPA as never knew they even existed or what they were until I came on this site, though as savings and investments are an either or signature, access to funds won't be a problem. Tks Jennifer:)
     
  10. Clive

    Clive Registered User

    Nov 7, 2004
    716
    Do I understand Joint Savings ??

    Hi Ashburton.

    I agree with Jennifer. You are likely to have problems with the local authority if you have JOINT savings and investments. (If the house is in joint names, or belongs to your mum, that is something else.) By joint I mean like in a bank account where either person can draw out, or shares where they have been bought, or inherited, in joint names.

    Unless your mother is very rich I think you need to take advice about your JOINT savings at once. My understanding is that Social Services will assume that HALF what is in your JOINT savings account/investments will ALWAYS belong to your mum.

    To try and clearly illustrate the point of how I believe savings are allocated I have assumed you and mum have no yearly income. (Any income you have just makes the situation worse).

    Your mum’s nursing home will charge say £50,000 a year. (I am making no allowance for the yearly increase for inflation).

    To illustrate the point I assume you and mum have JOINT savings/investments of £400,000. (This is just a nice round figure).

    From the £400,000 I believe Social Services will assume HALF is your mothers, so she has £200,000 available to pay for her care in year one.

    By year four your mum will have paid £200,000 for her care and the amount left in the joint bank account is also £200,000. (£400,000 less 4 years at £50,000 = £200,000)

    Half the £200,000 is yours and HALF belongs to your mum. (Not £400,000 yours and none for your mum as you might expect.)

    This means mum’s HALF of the bank account still has £100,000 left to pay for care and there is only £100,000 left in your half of the bank account.

    After six years your mum will have paid £300,000 for her care and there will be £100,000 left in the bank. (£400,000 less 6 years at £50,000 = £100,000). Half the £100,000 in the joint bank account belongs to your mum and will be used to pay for the Nursing Home in year seven.

    At the start of year eight there is £50,000 left in the bank.

    At this point I believe Social Services expect the joint account to be run down until your mum’s half is left with £21,000 which (I believe) is still the savings limit after which mum does not have to pay anymore. You are left with your half of the savings, which must also be £21,000 and not the £200,000 you believed was yours when mum went into the Nursing Home.

    In reality both you and mum will have some income each year, and so the money will last longer. (Half anything you pay in becomes your mums !)

    But you have no idea how long your mum may stay in the Nursing Home. It could be many years.
    Hope I haven’t misunderstood what you were asking. (I think IHT is the least of your concerns !!)

    The whole subject is very very complicated so you do need professional advice.

    Please don’t leave it until your mum reaches the next stage before you split up your savings.

    Best wishes

    Clive
     
  11. Ashburton

    Ashburton Registered User

    Feb 19, 2007
    99
    Clive, thanks very much for providing such a detailed reply, I have sent you a pm.
     
  12. Margaret W

    Margaret W Registered User

    Apr 28, 2007
    3,725
    North Derbyshire
    Hello everyone,

    Well please now disregard anything I said about Inheritance Tax, cos Chancellor Darling is changing the rules. And that is something to seriously consider about any decision you make - the fact that the law might change. Bear it in mind.

    I will preface any future postings on finance and tax issued with the words "ACCORDING TO MY CURRENT UNDERSTANDING OF THE POSITION", and will suffix everything with "PLEASE CHECK WITH YOUR FINANCIAL ADVISOR OR BANK BEFORE RELYING ON MY SUGGESTIONS".

    Indeed, I am prevented by my professional body from giving financial advice without the appropriate certificate, which I haven't got, so I'll confine myself to alterting people to possible problems or benefits, rather than giving advice.

    Sorry to have caused you a headache Brucie, more than once. Just trying to help.

    Regards

    Margaret
     

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