Care home fees - what do I do?

izoomzoom

This is so NOT the right place for this thread, but I don't quite know where else to post. Please be kind, this is not my doing.

Back story: Mom lent a large some of money to a relative 5 years ago. Relative has only now started to pay it back, but it will take a decade to repay at current amount. Mom was hospitalised this month, and hospital are wanting to discharge her now. She will have to go into a care home. She has some savings (like 6 months fees worth), and has a smallish foreign and UK pension coming in.

I feel like I'm stuck between a rock and a hard place. Effectively Mom gave away her money, and there is no guarantee that she'll ever get her money back. So what will the council do? What do I do? Pay full fees until she has no money left, and then she'll have a £2000 shortfall (or more, if nursing care required) every month (after pensions come in), and then what happens? I am speaking to relatives, to try and get them to increase repayments, but that money is now sunk into that relatives offspring, who seem to think it's their inheritance (its not, but that is what I'm up again).

Keep_pedalling

This is a very difficult situation for you. You will need to declare the loan in any financial assessment, and the LA may well pursue it to cover her costs when her saving run out. Do you have an LPA in place for your mother? 

Malthusian

I think you need professional legal advice. The debt exists and is enforceable (as the relative has begun to pay it back). Whether she has the right to demand that the relative pays it back faster is impossible to tell from the information given.

If you loan money with no formal agreement in place then the loan is repayable on demand. However, if there was an agreement that they could repay it over a decade then the relative is within their rights to stick to that. If that was the case, her pension income and the repayments would go towards her care fees and the council would make up the rest.

If she does have the right to demand the rest of the money back, the council might say that the debt is an asset like any other and she must exercise that right before they become liable.

From your mother's perspective, what the borrower has done with the money is irrelevant. Do they own a house or other assets that could be used to repay?

naedanger

izoomzoom said:

This is so NOT the right place for this thread, but I don't quite know where else to post. Please be kind, this is not my doing.

Back story: Mom lent a large some of money to a relative 5 years ago. Relative has only now started to pay it back, but it will take a decade to repay at current amount. Mom was hospitalised this month, and hospital are wanting to discharge her now. She will have to go into a care home. She has some savings (like 6 months fees worth), and has a smallish foreign and UK pension coming in.

I feel like I'm stuck between a rock and a hard place. Effectively Mom gave away her money, and there is no guarantee that she'll ever get her money back. So what will the council do? What do I do? Pay full fees until she has no money left, and then she'll have a £2000 shortfall (or more, if nursing care required) every month (after pensions come in), and then what happens? I am speaking to relatives, to try and get them to increase repayments, but that money is now sunk into that relatives offspring, who seem to think it's their inheritance (its not, but that is what I'm up again).

How much was the gift/loan? If it was less than £23,000 then please give the amount as it will make a difference.

Assuming the loan/gift was more than £23,000 then I suggest you resign yourself to paying for the care home from your mother's remaining savings while she has any money left and explain the situation as fully as possible to the council.  It is posssible they may not be very sympathetic or helpful if they think your mother was trying to deprive herself of capital.  But ultimately if the money runs out the council will have to pay any shortfall (at their choice of care home). Although I would expect them to pursue the relative if they can establish the payment was a loan. 

I would be as transparent as possible with council so they at least will have some sympathy with the situation you (and your mother) are now in. If you can help establish that the money was given as a loan rather than a gift then that may help them.

Also consider getting a LPA to manage your mother's affairs if this has not already been done and assuming it is not too late.

izoomzoom

The money is very much WELL over £23,000 ....

The bank debit note says "loan to 'relative' to purchase a property".

The details on Mom's bank statement say "repayment of loan" against each monthly amount (this has only just started to be repaid).
Mom has dementia, and is in late stage now. Was never able to get LPoA as she couldn't understand sufficiently when I tried to do this (5 years ago).

poppystar

izoomzoom said:

The money is very much WELL over £23,000 ....

The bank debit note says "loan to 'relative' to purchase a property".

The details on Mom's bank statement say "repayment of loan" against each monthly amount (this has only just started to be repaid).
Mom has dementia, and is in late stage now. Was never able to get LPoA as she couldn't understand sufficiently when I tried to do this (5 years ago).

So was the loan given before or after she lost capacity if both were 5 years ago? Is there a formal loan agreement? Who set it up if so?

Dox

There seems to be a paper trail confirming the sum was definitely a loan - was a charge in favour of your mother registered at the time she made the loan? Somehow I suspect not. 

If not, and the property is in the UK, the LA may be willing pay towards care home costs if they can have a charge over the property themselves, ensuring they will get their money at some point in the future.

I'd certainly get some proper legal advice before you go any further, not least in terms of your mother's capacity to make such a loan, given she had dementia at the time.

izoomzoom

I'd say she still had capacity when the loan was given. She most certainly mentioned it to me a few weeks after, although she told me a lesser amount. (So she knew what she was doing, but was already starting to have memory issues). No formal loan agreement done. I imagine my relative (and child), took Mom to the bank to do transfer. My relative mentioned to me around the time, that they would pay a sum of interest per year, but nothing was ever put in writing, and I'm not even sure my Mom was present when I had this conversation. Mom was formally diagnosed with Alzheimer's about a year later.  

xylophone

Mom lent a large some of money to a relative 5 years ago.
Mom has dementia, and is in late stage now. Was never able to get LPoA as she couldn't understand sufficiently when I tried to do this (5 years ago).

This relative effectively took money from your mother (made her sign a loan agreement) when  mother was incapable of giving informed consent?

I take it that your mother no longer owns/has never owned a property?

Your mother has been assessed by the Local Authority?

She is not eligible for CHC or even the nursing care component?

https://www.nhs.uk/conditions/social-care-and-support-guide/money-work-and-benefits/nhs-continuing-healthcare/

Does you mother receive Attendance Allowance?

If your mother has to fund her own care, then her savings, pensions, capital and loan repayments will need to be used to cover the fees.

Once she reaches the point that her capital reduces to the minimum permitted, the LA will take over but her pensions (state and private) and the loan repayments will still be used to fund her care.

You will need to make a full statement concerning her finances to the LA, including details of the loan repayment.

The LA may look into all the circumstances leading to the making of the loan.

74jax

Was the money given to purchase a property?  I would expect the LA to place a charge on that property so that when it sells the LA get a repayment back for the care home fees they have paid.  I'm not sure if the LA will take a monthly payment from the person who owns the property - so that the amount on against the house decreases each month.  
Be completely honest with the LA, it helps you have proof it was a loan and is to be repaid.  Hopefully the LA will pay the care homes fees whilst waiting for the property to sell.  

poppystar

I’m concerned that a bank was happy to make such a large loan under these circumstances and with no formal agreement on repayment, even more so if, as you think might be the case, they took her to the bank to get the transfer made. 

As you don’t have LPA the bank may not speak with you about this though.