Financial and legal affairs planning – The Alzheimer’s Society

Dont delay planning for tomorrow
Dont delay planning for tomorrow

As a person gets older or has dementia, it is important that they organise their financial and legal affairs while they are still able to do so. This ensures that in the future, their affairs will be set up in a way that they have chosen. The person may want a friend or family member to help them with this.

Make sure that all important papers are in order and that you know where to find them. These papers might include bank and building society statements, records of mortgage or rent, insurance policies, a will, tax and pension details and bills or guarantees.

Mental Capacity Act 2005

The Mental Capacity Act 2005 made provision for people to choose someone to manage not only their finances and property should they become incapable, but also to make health and welfare decisions on their behalf. They will be able to do this through a lasting power of attorney for personal welfare. LPAs replaced enduring power of attorneys (EPAs) in October 2007, when the Mental Capacity Act came into force, although EPAs made before this time are still valid.

Benefits

It is important to make sure that the person with dementia and their carer are receiving all the benefits to which they are entitled. For full details contact the head office of the Department for Work and Pensions (DWP, previously the Benefits Agency), or your local office (for details, contact the head office or look in the phone book). Alternatively, check with the Benefits Enquiry Line or your local Citizens Advice Bureau or advice agency.

Using an agent

If a person would like their benefits to be paid through a local post office but would prefer not to collect them in person, they can nominate another person, known as an 'agent', to collect their money on their behalf.

Many people arrange for someone else to collect their benefits occasionally, on an informal basis. They simply fill in the person's name and sign the declaration on the reverse of the relevant benefit order form. However, those wishing to make a regular arrangement should inform their local Department for Work and Pensions so that the person's name can be put in the benefits book as an authorised agent.

An agent can only be appointed by someone who understands what this involves, and is able to manage their own finances, with support from others. However, this arrangement can be very helpful, and is best arranged in the earlier stages of dementia.

Payment arrangements

There are four ways in which you can receive your benefits:

• You can have your benefits paid into your bank or building society account.

• You can have your benefits paid into a basic account at your bank or building society, with additional access at your post office.

• You can access your benefits at your post office with a card and PIN number.

• You can nominate someone else to have a card to access your account.

Appointeeship

The person with dementia may eventually become unable to manage their income from benefits. Someone else may then need to administer this income in the person's best interests, to ensure that all benefits are claimed and essentials paid for. This can be arranged through an 'appointeeship'.

The person who is prepared to act on behalf of the person with dementia should contact their local Department for Work and Pensions office. They should explain that the person with dementia is no longer able to manage their affairs and that they wish to become their appointee. Once they have completed the relevant form, a representative from the Department for Work and Pensions may visit the person with dementia, or ask for medical or other evidence, to confirm that they are no longer able to act on their own behalf. The representative should also check that the prospective appointee is suitable and understands their responsibilities.

Wherever possible, the appointee should be a close relative who either lives with the person with dementia or visits them frequently. In certain circumstances, the appointee might be a friend, neighbour, or caring professional.

The appointee:

• Should report any change in the person's circumstances that may affect benefit entitlement

• May sign on behalf of the person with dementia, if they are a non-tax payer, to enable bank and building society interest to be paid without deducting income tax

• Can only deal with the person's income from benefits, except for small amounts of savings (about £500), which can be used to meet unforeseen emergencies.

An appointee can resign if they feel that they are no longer able to carry out the task. The Department for Work and Pensions can also revoke the appointeeship if it has evidence that the appointee is not acting in the person's best interests. If someone starts to act on behalf of the person with dementia under a registered enduring power of attorney, or is made a deputy by the Court of Protection, this person usually takes over from the appointee in dealing with benefits. If the deputy and the appointee wanted to work side by side then they would have to agree this with the Court of Protection first.

Banking

There are ways in which banking can make it easier for a person with dementia to manage their money. These include:

• Having benefits paid directly into the bank or building society account on a four-weekly basis

• Paying regular bills through direct debit or standing order.

Joint accounts

Many people have joint bank accounts. A joint account may be a useful way of managing finances in the early stages of dementia. However, most joint bank accounts are set up to operate only when both parties have capacity to run the bank account. If a bank knows that someone is acting as an enduring power of attorney, lasting power of attorney or deputy for someone, they will usually want a separate bank account for the person with dementia rather than a joint account.

In terms of separating finances, when it comes to paying for care it is also advisable to have separate accounts. This is because a local authority ought to be means testing the person who is in receipt of the service (for example, home care or residential care), and no one else.

Trusts

If the person with dementia has financial assets, such as property or savings, they can set up a trust. This ensures that the assets are managed in a way that the person chooses, both now and in the future. There are a number of different kinds of trusts and ways of arranging them.

If a person in the early stages of dementia wants to do this, they should consult a solicitor while they are still able to convey their wishes clearly. It is important that the trust is set up well before the person needs care in a care home. This is because the local authority needs to be sure that the person with dementia has not set up a trust to deliberately deprive themselves of assets that could contribute towards the cost of their care.

Wills

Everyone should make a Will. A Will ensures that when a person dies, their money and possessions go to people of their choosing. People with dementia who wish to make or change their Will should seek legal advice from a solicitor as soon as possible.

People with dementia may still have 'testamentary capacity' – in other words, the legal capacity to make or change a Will. The solicitor will make a decision about this, often after taking medical advice.

People who no longer have testamentary capacity because of their dementia cannot make or change a Will, and no one can do so on their behalf, except for the Court of Protection, which in certain circumstances can make a statutory will. A solicitor can explain this further, and the Court of Protection can send out information on statutory Wills (see details below).

A partner, relative or close friend of the person with dementia may also want to make or change their Will. They may wish to leave some or all of their estate to people other than the person with dementia – for example, their children.

If a person wishes to leave some or all of their estate to a person with dementia, they should consider setting up a trust to ensure that the assets are used in the best interests of the person with dementia. They should also check what effect a bequest will have on any state benefits that the person receives.

A group of Home Instead CAREGivers talking
Family welcoming a Home Instead care manager into their home