The Financial Side of Dementia

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Following a diagnosis of dementia one of the most daunting things to consider can be ensuring that the financial side of things is taken care of. This can range from planning a monthly budget, to understanding how to fund care fees, applying for state benefits and ensuring that assets are properly managed and protected.

With the right support and advice this can all be taken care of. 

PUTTING A FINANCIAL PLAN TOGETHER 

The financial consequences of dementia may begin to be felt well before you need to consider funding the cost of care. If your parent or loved one has always managed their own finances (or that of the family) they will probably need help very quickly.

By seeking advice about financial support, you can create a plan to make sure that things continue as normal during what may well be a difficult time. A professional adviser will help you to work with the person affected by dementia, starting from the immediate need to manage their income through to the potential need for care or assistance. They will guide you through the options and remove many of the uncertainties and concerns about the future.

Details of state benefits can be found at www.gov.uk/browse/benefits Even if your income appears to be enough to cover the cost of care in full, take advice. It is likely that improvements can be made.

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PAYING FOR CARE – OPTIONS 

For those required to pay for their own care, there are a number of different ways this may be done, depending upon your circumstances: 

  1. Own income 
  2. Family contribution 
  3. Savings accounts 
  4. Investments 
  5. Care Fees Plan

 

Own income: You may receive sufficient income to pay for care in full, or as a “top up”. This income could be from a number of possible sources: • Pensions • Investment income • Rental property • Attendance Allowance • Nursing Care contribution (if applicable) • Funding from other family members

Family contribution: Your family may be able to cover some or all of the cost, or difference in cost, as a “top-up”. If neither of these are an option, you will need to raise money either by accessing savings or investments, releasing money from your home via an equity release plan, or selling the home.

Savings accounts: This includes money held in deposit accounts, Cash, Individual Savings Accounts (ISAs) and National Savings. Very low risk, but with current rates of interest being so low you will need to ensure your capital is not eroded too quickly.

Investments: There are many possibilities here, from investment bonds and unit trusts to shares. However, the most profitable are usually the highest risk therefore a balance may need to be struck. There is no guarantee that values will not fall and put your capital at risk. Again, this is where advice from a professional can be invaluable by helping to ensure your savings and investments provide you with a predictable and consistent income for funding care costs.

Care Fees Plans (also known as Immediate Needs Annuities): These are specialist insurance plans designed to convert capital into income to help meet care fees. In return for a one-off lump sum you receive a guaranteed tax free income for life.

YOUR PROPERTY 

The proceeds of a house sale can be used to support any of these options if other assets on their own are insufficient.

ARRANGING ONGOING SUPPORT AND MONITORING 

It’s also a good idea for partners or family members to meet regularly with a Financial Adviser to monitor and understand any changes in circumstances as they develop and to adapt their financial arrangements to take account of them. This can provide genuine peace of mind for everyone when it really matters.  Looking after your finances can have a dramatic effect on your ability to pay for the type of care or care home that you require. Seeking professional advice from a regulated financial adviser will help you achieve this.

FUNDING THE COST OF LONG TERM CARE 

One of the biggest concerns for those with dementia, and their families, is how to fund the cost of both immediate and longer-term care. Although state benefits such as Attendance Allowance are available, it can be difficult to find out about the wider range of support that local authorities and the NHS can offer. This is especially true when trying to understand the impact of means testing and the likely implications of self-funding.  It is therefore not surprising that one in four people who fund their own care run out of money (source: Partnership 2013), leading to potential compromises regarding their future care.  Most commonly, this is because they do not consider all the options or take proper advice. With financial planning it may be possible to fund care for as long as required, whilst safeguarding as much capital as possible.  For this reason, consulting with a specialist financial adviser is essential from both a health and financial perspective.

Recognise the signs – how to spot the signs of financial abuse in a person with dementia

  • Monitor bills and check bank statements.  If bills are left unpaid or large sums of money have come out of a person’s account, this could be an indication that they are not managing financially or have been scammed.
  • Be aware of unusual or seemingly unneeded purchases in the home.  These items could have been miss-sold by unscrupulous cold callers or telesales companies.
  • Look out for unexpected changes to the person’s house.  This could include incomplete renovations, missing valuables or workmen visiting to carry out unnecessary work.
  • Be aware of sudden new friends or acquaintances.  In particular, be aware of those who the person says are inquiring about moving in, taking trips together or making joint financial commitments.
  • Check that large amounts of cash are not being kept in the home.  This could be a sign that the person with dementia is withdrawing large amounts of cash which will put them at unnecessary risk of theft.