Equity release to pay care home fees

Stevensuperbike

Hi there, I’ll try and keep on subject. 

Here goes…. Mum and dad both in their 80’s and have dementia. Mum has recently gone in care home as health deteriorated. As dad is still at home the council are part funding the care home so I'm paying £770 3rd party top-up per month to keep my mum in there. They do not have over £23k. The house is paid for and I now have power of it attorney over them both for both finance and health etc. 

Can anyone help me to suggest best way forward incase my dad deteriorates and needs to go into care home too? Will I have to sell their house to pay for care home etc? What happens to inheritance etc? If any? 

Their house is approx £150k 
Is equity release an option? Thank you

Keep_pedalling

While your father lives in his home it is disregarded for your mother’s care. If he needs care the yes the house will need to be sold to fund both of them. I can’t see how ER can help here even if you were able to arrange (which is unlikely) it as the house would still need to be sold if the money ran out and you would have the rolled up interest on top of that.

All this of cause reduces any inheritance you might receive. Do your parents have wills?

GDB2222

Why are the council only part funding mum? Is the home she is in too expensive, or is there something else?

Keep_pedalling

GDB2222 said:

Why are the council only part funding mum? Is the home she is in too expensive, or is there something else?

If the OP is paying top up then she will be in a care home with fees in excess of what the LA is willing to pay. 

Linton

Stevensuperbike said:

Hi there, I’ll try and keep on subject. 

Here goes…. Mum and dad both in their 80’s and have dementia. Mum has recently gone in care home as health deteriorated. As dad is still at home the council are part funding the care home so I'm paying £770 3rd party top-up per month to keep my mum in there. They do not have over £23k. The house is paid for and I now have power of it attorney over them both for both finance and health etc. 

Can anyone help me to suggest best way forward incase my dad deteriorates and needs to go into care home too? Will I have to sell their house to pay for care home etc? What happens to inheritance etc? If any? 

Their house is approx £150k 
Is equity release an option? Thank you

If your father needs to go into care, as he has assets of more than £23K the Local Authority will not contribute and the costs will have to come from elsewhere.  The Local Authority wont care how the costs are paid, that is his problem and hence your's as his Attorney to sort  out.

Some of the costs can be paid from your father's income - State Pension, any employment pensions, benefits etc.  The easiest and cheapest way of raising further money would be for the house to be sold and for you to pay the care home as required from the proceeds.

When your father dies in care any money left over would form part of his estate and so available to his beneficiaries.  Clearly your father's and mother's needs take priority over any inheritance.

I do not believe ER would help for 2 reasons.  Firstly I believe that ER companies would not be prepared to lend the money if the owners of the property were not living there.  The second reason is that you as the Attorney only have authority to act in your parent's best interests. Your or any other beneficies best interests are outside your remit. It is far from clear to me that taking out ER which would incur extra costs could be seen as acting in your parent's best interests. Any doubtful actions would have to be cleared by the Court of Protection which could take significant time and effort.  Though in this case I cant see spending extra money on interest and charges would be in the interests of the beneficiaries either.

The one area I am not clear about is exactly how payment for your mother's care would be arranged.  At the moment since your father is living in the house the local authority cannot take its value into consideration.  Whether this would change if your father also ceases to live there I dont know.

Stevensuperbike

Hi thank you for the helpful comments. This does makes sense to me. I have another question if someone could take a look? 

What’s stopping my dad selling up and living with me for a month before moving into a care home? What about gifting the house money to grandchildren etc so the local authority can’t get their money on it? Thanks. 

BungalowBel

If he did that the LA would almost certainly class it as deliberate deprivation of assets and he would be assessed as though he still had the house.

Also, look at it this way.  He will have the assets to pay for a good care home and not be limited by what the LA will pay.  He will have choice.  He will no longer need his marital home as he will not be living there.  Wherever he lives, whether it be a care home or a palace, he will have to pay to live there.  Also he will be having care provided as well as a home.   So therefore, surely it is better to sell the house to pay for his care and new home?

I know we all want to leave an inheritance, I certainly do.  But someone's well being in their last few years is surely more important than having an inheritance?  There may be some money left anyway.

Stevensuperbike

Yes absolutely, my priority if the welfare of my parents. Money is not that important to me, I know it’s a big shame about the money etc but it’s not mine it’s my parents to use. 

I think the morally right way is to allow my dad to live at home until he's unable to look after himself or wishes to move to same care home as mum. When this occurs sell the house for him and use money to fund care home until £23k is left for them both.

tooldle

If  it were me, I’d also consider dad’s ability to visit mum, in any decision. By that i mean he might lose the ability to visit (get organised to arrive at the correct time to correct location, long before he looses ability to ‘manage’ at home. This was certainly the case for my parent who was completely thrown by the other parent being in hospital, despite being able to feed and water themselves to a degree. Dementia is often not a linear journey. 

Stevensuperbike

Thank you for your response. Dad is not safe to drive so car has been taken off him and sold etc. dads capacity to visit mum is non existent as he often doesn’t know what day it is. Care home is about 2 miles away but he would have no idea how to get there safely. His mental capability is low, I have to order his weekly shop, papers, he has carers visiting him 3 times a day to clean, cook etc as can’t do it himself. As I’m writing this it is becoming clearer that he himself is possibly better off in the same home! 

Keep_pedalling

It sounds very much like you are going to be in the unfortunate position of having both parents in residential care at the same time, and getting them both in the same care home can be very difficult so you need to be proactive on this now. Speak to you mum’s care home and find out what they can offer should the need arise. Also have a chat with your father’s social worker.

Having the ability to fully self fund offers a lot more choice both regards to the number of care homes available and how soon you can obtain a place. The value of the house and their level of income will also factor in how long they can self fund in any particular care home so that will be another factor to consider.