Advice to help retired relatives in crisis please - state pensions etc

justcheckin

Hi.

Please bear with the lack of some detail, my parents are too unwell to engage with the detail at the moment.

Him: 75 in April, Her 74 in March

Net income monthly:

Him:

state pension	904
old DB pension	165
std life pension	65

Her:
 State pension  342

They still have some savings (23k) after debts but they are spending c. £1-2k a month on spending above their means. This is a lot better than their previous depletion of capital, but is still a huge concern.

My key questions:
Can anyone clever enough make a good ballpark guess as to the inheritable component of HIS state pension please?
Other than the using 2-3 years worth of SIPP she could still yield £2880 grossed up to £3600, is there anything else big I am missing to help?
I am guessing using savings to defer her state pension does not become cash neutral for quite a few years?

Many thanks for any/all help received.

LHW99

Have you looked into Attendance Allowance if they are sick?

Have you looked at whether they qualify for any other benefits (https://www.entitledto.co.uk/)?

Could some form of equity release help?

justcheckin

LHW99 said:

Have you looked into Attendance Allowance if they are sick? Yes, apparently it will take 6 months to kick-in and they applied c. 3 weeks ago

Have you looked at whether they qualify for any other benefits (https://www.entitledto.co.uk/)?

No, I thought their current income was too high, but I will check now, thanks.

Could some form of equity release help?

Unfortunately they drew down £101k in August and he has spent £170k inclusive of that on (in his words) 'mismanagement'. I don't think she would allow it again in his lifetime even if there is theoretically more equity.

My answers in bold and italics above.

AlanP_2

justcheckin said:

Unfortunately they drew down £101k in August and he has spent £170k inclusive of that on (in his words) 'mismanagement'. I don't think she would allow it again in his lifetime even if there is theoretically more equity.

My answers in bold and italics above.

That is a big red flag as you no doubt have realised.

How can £170k have been spent since August? Has it been invested in something fraudulent, or is there at least something "tangible" if not valuable to show for it?

justcheckin

AlanP_2 said:

That is a big red flag as you no doubt have realised. Yes. I have also tried to make his medical team aware of this.

How can £170k have been spent since August? Has it been invested in something fraudulent, 

I am not sure exactly over how long this amount has been lost, I have not yet been given all the figures, but I am currently lead to believe that at least £150k was lost in 7 months. The majority of this was on a failed business (he was the Director, so there is no fraud involved other than his unilateral actions with joint assets). The rest I believe is them both living drastically above their means.

or is there at least something "tangible" if not valuable to show for it? 

Other than a c. £200 phone handset, no I can't see anything really to show for it.

badmemory

Is she on a 60% pension?  If so that should go up to the full basic state pension (not the new one) so only about £130 per week.  Hopefully half the DB pension unless he was selfish & decided he didn't want a widows pension.  Are you in a position to search out the paperwork, that should tell you.  Re his state pension I believe that depends on which category his extras fall into.  They should be getting a statement soon which will tell you what is what, if you can get sight of that then you can google the categories remember you are looking at the basic state pension & not the new state pension NSP.  I am very slightly younger & have 6 categories some of which I believe are inheritable.  Obviously the basic state pension currently £129.20, this usually goes up on the second pay week of the new tax year.

Then it gets more complicated:-

Pre 97 additional state pension

Post 97 additional state pension

Extra - basic state pension

Extra - additional state pension

Graduated Retirement Benefit

The 2 extras may be because I deferred for some time but thought I would mention them anyway.

I can see why you are concerned.  Have you any way of searching out paperwork?  Is it possible there were already massive debts that the £170k was used to pay off?

Are you sure about the wait for AA?  When we applied for my mother it was backdated to the date of the application, although this was almost 8 years ago.  Or is this because of the length of the hospital stay?

LHW99

Do you have Power of Attorney? It sounds as if it could be necessary / useful soon. Under the circumstances, is there any question of your father's mental capacity (not nice to have to consider, but may be an aspect contributing to what has happened).

xylophone

Is there any question over your father's mental capacity?
If not, it might be as well for you to get him to give you POA, also your mother and for you to take over management of their finances if they will agree?
You say "monthly" state pension - do you mean four weekly?
They are both on the old state pension scheme so see
https://www.thisismoney.co.uk/money/pensions/article-6270261/Can-couples-inherit-state-pension-other.html re inheritance.
Have you managed to establish what they are spending their money on?
Is there any form of LA provided very sheltered housing available in their area? I am wondering whether it might be an option for them after selling their property.
The money from the sale could then be invested to supplement their monthly income.
Is the case that your father is now too unwell for any more financial adventures to be a possibility?

Dox

badmemory said:

IHopefully half the DB pension unless he was selfish & decided he didn't want a widows pension.  Are you in a position to search out the paperwork, that should tell you.  

It's not (usually) a question of 'being selfish', especially where a DB pension is concerned. The rules will almost always stipulate what benefits are payable on the death of the pensioner. If there was a Guaranteed Minimum Pension element to the pension, any  surviving spouse is automatically entitled to a pension related to that.

DairyQueen

Do you know roughly how much their property is worth? Is there sufficient equity remaining to suggest that downsizing is worthwhile?

Given that the household income will reduce even further if your mother is widowed, and that they are already struggling to live within their means by a substantial amount, preserving the remaining equity in the home (by downsizing now and repaying the equity release loan) may be a good option. Any surplus proceeds could then be used to supplement their income but would require careful management. The longer the loan remains o/s the more the compounded interest will eat into the remaining equity. It's possible that there will be an 'early settlement' charge so that's worth investigating as it could make downsizing uneconomic.

I appreciate that your parents are unwell but at this rate of overspend delaying taking action will cost them dear. Are you able to undertake an analysis of their expenses in order to see exactly where they are spending and identify where cuts could be made? To do this would require full disclosure from your parents. Dad may well resist (pride) but without any intervention they are courting disaster.

The situation you describe suggests that a drastic cut in spending is required regardless of any other action taken and to achieve that you (they?) need to know where cuts can (must?) be made as well as identifying possible sources of additional income.

It's unlikely that this situation has developed recently. The timing of the equity release and the 'disappearance' of the proceeds over such a short time indicates that your dad was in debt and used the money to settle but without addressing the underlying issue that caused the debt. Over-spenders can maintain their lifestyle for reasonable lengths by maxing-out overdrafts, bank loans and credit cards until their credit, or ability to service the debt, or both, is exhausted.

You can only minimally help if either parent resists revealing the history and complete financial information. If this is the outcome then take comfort that you have done your best by providing what information you can.

I hope your parents (dad?) are sufficiently wise to realise that they need help and the more they deny your intervention, the worse the situation will be when you (and possibly mum) are eventually left to pick up the pieces. 

Wishing you the best of luck at this difficult time.

badmemory

Dox said:

badmemory said:

IHopefully half the DB pension unless he was selfish & decided he didn't want a widows pension.  Are you in a position to search out the paperwork, that should tell you.  

It's not (usually) a question of 'being selfish', especially where a DB pension is concerned. The rules will almost always stipulate what benefits are payable on the death of the pensioner. If there was a Guaranteed Minimum Pension element to the pension, any  surviving spouse is automatically entitled to a pension related to that.

Sorry didn't know that this was not normally possible as I know someone who did that, didn't tell his wife & left her well & truly in the mire when he died.  Thanks for clearing it up.