Loan for Top up carehome fees

[lisyloo]

Hello Fools,

My MIL has been assessed and needs to go into a care home.
She owns half a flat that my 89 year old FIL lives in (hence disregarded for care home fees) and has a small amount of savings (below the minimum £14.5k? so disregarded).
The nicer homes where we'd all want our parents to live require a top-up in addition to LA funding.
There are 2 offspring. A son with money and daughter without money.
The obvious solution (assuming all parties agree) is that son pays the top-up and it's deducted from the sale of the flat before estate is split 50/50.

Can you help by identifying the potential pitfalls e.g.
1) Money lent exceeds value of small flat
2) Son's wife (me) wants a divorce and son now needs to sell his own home to settle divorce.
3) Daughter denies any existence of loan agreement.
4) Daughter dies intestate and her children/partner deny existence of loan agreement.
5) Son dies
6) Son circumstances change

Secondly what would be the required action to make this safe for all concerned.
A charge on the property isn't very practical given the loan will increase on a monthly basis - or can it be done on an increasing amount?
Can a formal agreement be drawn up with a solicitor that would hold in the event of the death of any relevant party e.g. the son or daughter dies.
BTW - MIL has lost mental capacity and would not agree to power of attorney when she had mental capacity (granddaughter has ordinary power of attorney but I believe this is for drawing cash from bank not for making decisions).

Thanks for any help as it would help to think it all through.
We do all trust each other, but there are a still pitfalls we must think through for the benefit of all concerned.

[rgifford]

Does FIL not inherit flat on death of MIL? If so you can't have any agreement based on the value/sale of the flat as the money from that may not ever be available.

You haven't included 'Pay top up from 14.5k until it has gone' in your options.

[Loup321]

I would have thought that the parties to the loan are the son and the mother. If the daughter (or her beneficiaries in the event of her death before the mother) don't know it exists, that's neither here nor there. They are not party to it, and after the mother's death the estate will pay back the loan and all other debts before any payments to beneficiaries can be made.

However, if the mother does not have capacity, she cannot agree to a loan (I think). Would you need to go through the courts to get an attourney? And I think court-appointed attourneys have less power than ones chosen by the person, so would they be able to agree to this?

To have an increasing amount in the loan, can you not just have a series small loans? One a year (or even one a month but that would be a lot of bits of paper!) with it's own paperwork, repayable within x months of the date of death (or who? MIL or FIL?), might be the answer.

What do you want to happen when MIL dies? Do you want FIL to have to sell the home to repay the debt, or should it be linked to his death as well? I wasn't sure whether they were joint tenants or tenants in common, which may have a bearing.

If you do want a divorce from the son, what do you want to happen? If you want the loan to be treated as a joint asset by the court, you could both be listed as lenders on it from the start.

[lisyloo]

Yes correct FIL will inherit flat from MIL and vice versa on first death, so no sale of flat until both are dead or permanently not needing it i.e. in residential care permanently.

Also correct - top up would initially be paid from their current savings, but we would want to have a plan in place for after that because we wouldn't want to find mum had to be moved (suddenly) when money dries up to somewhere inferior. She has demensia and is now 89 so moving her a second time once she'd got used to he surroundings would be devastating for her.

I would have thought that the parties to the loan are the son and the mother.

The care home is a choice for both the son and the daughter (probably slightly more the daughter as she is the local sibling making more visits).
I would expect the daughter to choose the best even if it reduces her future inheritance.
We are all working together through a fall, hospital etc. and supporting each other in the best way we can, so I don't think that excluding her would be at all in everyone best interests. It affects her by reducing her inheritance and whilst I would expect her to agree, these things work better if everyone is consulted.
As the son's wife who has shared money and financial decisions with the son I would expect to be included in any financial discussion that affects us jointly. This is joint savings and I would be deprived of access to this money for an indefinite period. I guess some people organise their finances differently but this is joint money, not just the sons.

AFAIK FIL and MIL own the house jointly (whichever the normal default is). We'd expect FIL to stay there until he dies or needs care himself.

If we were to divorce (not on the cards, but looking to mitigate risks) then I wouldn't want to have to wait for the sale of a home of ex-relatives for my settlement, so to mitigate that risk son needs to make the loan out of his half of our assets. I think that's possible and it's exactly the sort of thing I want to achieve - knowing and mitigating the risks.

[lisyloo]

Is one solution a loan between son and daughter to repaid at time of inheritance?
This would not involve MIL who doesn't have mental capacity or FIL whose assets pass to MIL on his death.
It would protect son from daughters death (she has no will and common law partner who has contributed to her home ....ARGHH) and also protect son's wife as loan is part of his assets.

[Satsuma]

Could a solution be launched/owned by FIL?

i.e. any loans are in his name, possibly secured against the house. And whatever is left after the last one dies goes to the children as per Will (Will can be changed to reflect different inheritances if, for example, the loam comes from the son)

Makes it much less messy, and quite a common scenario in terms of financing care.

[Satsuma]

And also the thing you need to take charge of MIL finances now she has lost capacity is Court of Protection Guardianship.
Much more faff and costs than Power of Attorney, unfortunately.

You may wish to make a judgment on whether the time and cost (possibly years, and hundreds if not thousands, plus ongoing fees) is likely to exceed her likely lifespan.

A third option is to cash the lot in and have FIL move in with MIL to the home, paying his own fees until such time as he qualifies for local authroity support or the money runs out (or both). He may well be utterly bereft at losing her to the home in the first place, which is a problem that can be solved by throwing money at it.

[lisyloo]

Could a solution be launched/owned by FIL?

i.e. any loans are in his name, possibly secured against the house. And whatever is left after the last one dies goes to the children as per Will (Will can be changed to reflect different inheritances if, for example, the loam comes from the son)

Makes it much less messy, and quite a common scenario in terms of financing care.

I don't think this works.
My understanding is that if FIL dies then house passes entirely to MIL outside of the estate (joint tenants?)
There is no money in FIL's estate to pay loan and no loan with MIL.

How does will get changed if MIL no longer has capacity?

[lisyloo]

A third option is to cash the lot in and have FIL move in with MIL to the home, paying his own fees until such time as he qualifies for local authroity support or the money runs out (or both).

FIL absolutely does not want to move in with MIL.
At 89 he cannot cope mentally or physically with the responsibility for her needs 24/7 and with her demensia she can be vile towards him and impossible to please. Hard to explain but I've been there and had to walk out after 5 hours, whereas he is there 24/7 and can't leave.
Even if he isn't expected to care, he is expected to be on-standy to call for help 24/7.

He can look after himself i.e. get himself food and drinks and get dressed and it's sad to say it but they are far better off living separately now.

But thanks for the suggestion, you weren't to know the circs of their relationship and needs.

[lisyloo]

And also the thing you need to take charge of MIL finances now she has lost capacity is Court of Protection Guardianship..

In practice we have this already.
Granddaughter has access to bank account/ATM via ordinary POA and most of the bills are on DD.

I am signed up with social services as financial agent.

[Clitheroekid]

BTW - MIL has lost mental capacity and would not agree to power of attorney when she had mental capacity (granddaughter has ordinary power of attorney but I believe this is for drawing cash from bank not for making decisions).

Unfortunately this is the key point, and effectively prevents any agreement being entered into with your MIL.

As she doesn't have capacity she is incapable of entering into any legally binding agreement.

Furthermore, the granddaughter's ordinary power of attorney is no longer valid and cannot continue to be used. An ordinary POA is only as good as the person who gave it. Once that person loses capacity the POA ceases to be of any effect, and any transactions that are carried out under its authority are legally void. This was precisely why Lasting Powers of Attorney were invented.

Your granddaughter therefore has no legal authority to withdraw cash from the bank, no matter how well-intentioned she is or that the money is being used solely for your MIL's welfare. If your MIL were to die then her executor could demand repayment of that money.

I realise, of course, that within the context of a family such `technicalities' are often overlooked and ignored, and that may well be the common sense approach. But this is the Legal Issues board, so you / the granddaughter do need to be aware that her conduct is illegal, so at least she can make an informed decision as to whether she wishes to continue.

I also suspect that your authority to act as financial agent may no longer be valid, but as I don't really understand what that arrangement is I can't be sure.

Unfortunately, the only proper solution is for a Deputy to be appointed by the Court of Protection to manage your MIL's affairs. The Deputy is normally a close relative who's sufficiently intelligent and responsible to take on the role.

It's quite a complicated process, with a lot of form-filling and various requirements to notify relatives etc, but it's the only legal way of dealing with the situation. Many people employ a solicitor to handle it, and their charges are paid out of the patient's money. The fees for obtaining a Deputyship Order are fixed at £950 + VAT, and there is also a court fee, though this is waived for people who qualify for means tested benefits.

When making the application for the Deputyship the Court could also authorise some form of loan arrangement of the type mentioned, provided it can be seen to be in the patient's best interests. From what you've said I would think you could establish that fairly easily.

Sorry to be the bringer of bad news.

[beeswax]

My MIL is in a nursing/care home and has been for 2 years and has ever increasing severity of dementia. I will leave others to consider the legalities of the situation but my experience of my MIL who is older than your MIL is do you have a choice of care home that doesn't want a top up fee either locally or within reasonable travelling distance? Because the fact that you want her to be in a better care home (a very reasonable request, been there, done that) but your MIL's dementia 'may' mean that she is not that aware of her surroundings as you are and so wouldn't make any difference if she was in Buckingham Palace or a bedsit at the end of the road...and therefore is it worth looking at these other homes? The LA will know which homes need a top up and which ones don't. Most of the ones in my area do, especially the EMI dementia homes that are are more suited for people with severe dementia and care workers/nurses have the right training too.

There may well come a time as you said when the money runs out and there is pressure to move her on. And so maybe it would be preferable to place her in one that doesn't have one??

The other point not touched on that I read with interest in the care act of 2015 that is applicable now is that children are NOT responsible or required legally to pay anything towards their parents care in the event of a top up requirement. This is not well known imo. Not just that but if you do enter into such an arrangement, it could be open ended until the person in care dies and the top up could well increase year on year. If my MIL has to move to an EMI care home (a high probability) then the LA has a legal duty to find her one and even pay the top up if that is needed (If third parties refuse to pay it etc) but they will try and find one that doesn't need one, even which could involve more travelling for you but in the same LA area.

But the fact that there is property involved does mean the LA will apply means testing until her assets goes below the 14 grand which I think you have said they have now?? If your FIL has to go into care, then the value of his assets and the property will come into play and be deferred until his death at which time the LA will recover the costs they have paid. Of course all their monies and pensions will go towards their care costs except for 24 pounds a week that they are allowed to keep to cover personal costs like hair and nails and shower gel/soap/deodorants etc. These may be free in some homes but not in my area even when people are paying 800 pounds a week which to me is disgusting but that is another subject.

It can be a minefield. But my MIL doesn't know where she is and the most important thing is the quality of care she is getting and most are pretty good as ALL care homes are audited by the Care Quality Commision on a regular basis. You will find their audit results online for each home.

Best wishes and patience on all matters is a blessing if you can manage it but a divorce as well?

Mike

[beeswax]

Sorry I forgot to mention that the LA have a lot of bargaining power because they channel people into them which fills empty rooms in care homes even for short term respite care because many LA care homes have closed but they pay a different rate because of that than someone going into them on their own volition ie outside of the LA contract and so although as I have said that most EMI care homes do want a top up, its come to my knowledge just recently that some of these homes will 'negotiate' the top up fees with the LA or the family if they have vacancies and so that may be another avenue to think about. But its also a fact that the rooms in all care homes are generally at a premium which will get worse with an ever increasing ageing population as we are doing and don't see many new care homes being built as even the current ones change hands often as they claim they are losing money which is a surprise given the weekly fees?

ATB

[Alaric]

don't see many new care homes being built

That might depend where you live. I've got the impression that "Care Homes" get the easiest ride on planning permission. Logically a site which is approaching a kilometre from the town centre, but adjacent to a bypass junction and business park is a more obvious location for residential flats than a care home. That's where the Care Home is and a few other sites appear to be going that way as well.

[lisyloo2]

Thankyou all.

Mike - we haven't looked at any places in person yet (decision that she needs a home made on tuesday, less than 2 days ago). I have only looked online at the moment and spoken to a few. I am trying to keep an open mind but it looks very 2 tier at the moment with the places in the LA list providing basic care and often graded as "needs improvement" and the other lovely places with awards and glowing reviews being more expensive. Her awareness and mood changes daily, but she would benefit from some interaction/stimulating activities e.g. Talking, playing cards, maybe singing. She was going to day care before and loved it. She is currently in hospital (after a fall) and too far away to talk to or see the other residents. She is getting good care in hospital but no stimulation at all - imagine only being able to sit in a chair all day. She would not be able to adapt to a TV remote control or CD player. So I think at the stage she's at she would benefit from the more expensive homes that offer the stimulating activities, but i take your point that the financial commitment is open ended and could increase.

The "financial agent" status refers to a recent application for care at home and day care.
She was recently assessed for this (March I think). I did all the paperwork for social services/DWP and signed as her "financial agent" and at that time she signed in agreement. Her income was £260 per week and you need £300 per week to pay for care so she paid nothing at all. Her assets are half a flat (disregarded as FIL lives there) plus about £7k (same for FIL but that didn't count).
She is not allowed to pay her own top ups, firstly because she's been deemed to be unable to pay and also because it wouldn't be long term. How they would stop it in practice I don't know but the rules are she can't pay for it herself.

Daughter and granddaughter (grandson also) live fairly close by and do regular visits but are in a different LA.
We have a list from social worker, many of which look poorly graded by the care quality commission.

Her mental state had deteriorated since the fall/hospital. Apparently it's quite common with demensia sufferers that they recover to a plateau but at each event/fall they never quite recover to the position they were in before. We all think she has deteriorated to the point of not understanding what she would be signing.

[lisyloo2]

ClitheroeKid - as it's a joint bank account (between MIL and FIL) can granddaughter take money out with permission of FIL?

[beeswax]

Hi Lisyloo,

Giving the residents daily stimulation is probably one of the biggest challenges both for the residents and the activity arranger(s) who organise it and there was just one in my MIL former home and two in her present home but from my limited experience, I would say most of the time the residents are left to their own devices that are either asleep with the TV on the whole time or are captive in their rooms. They do organise things like singers coming in about once a month or twice at the most and they have bingo and one or two other activities for the ones that are capable and can't say I have seen any of them reading though. I think their days are long and so tend to sleep. But you will probably know by now that some homes are dementia or EMI only and some are completely residential that won't normally accept dementia residents and can even be asked to be moved by the home manager if their condition worsens both mentally and physically as my MIL has had to and may have to once again with her deteriorating dementia. And you are right that they have some better days but it tends to get worse. Some care homes cover both areas and its not a bad idea for her to go in one that would cater for her in the residential part to start with and then if needed she can be transferred to the dementia wing without having to look for another home completely. Some other activities may include going to the theatre or to a pub for a meal but again the numbers are small each time as each resident needs a carer with them. My MIL went on a canal trip one time and staff are at a premium.

Just to say that I sing and play music to the residents in my MIL's care home about once a week for about an hour which they enjoy and I do too as have around 300 songs on my tablet and have backing tracks and have fun with them by interacting with them as much as I can. I did that in her previous home too and I also visit some of the residents I know there which they appreciate too but sadly a lot of them pass away in these homes on a fairly regular basis too. I think I read that the average time they spend in their care/nursing homes are around two years which is sad too.

All the best in your quest and hope you find somewhere nice for her.

Mike

PS forgot but its worth trying to negotiate the top up and they may reduce it if they are not full up.

[Satsuma]

Could a solution be launched/owned by FIL?

i.e. any loans are in his name, possibly secured against the house. And whatever is left after the last one dies goes to the children as per Will (Will can be changed to reflect different inheritances if, for example, the loam comes from the son)

Makes it much less messy, and quite a common scenario in terms of financing care.

I don't think this works.
My understanding is that if FIL dies then house passes entirely to MIL outside of the estate (joint tenants?)
There is no money in FIL's estate to pay loan and no loan with MIL.

How does will get changed if MIL no longer has capacity?

My thinking on this was:

FIL takes out a loan of (finger in the air) £20,000 secured against the home to be repaid on sale of flat after second death.
Uses this to pay top up fees (home may even agree to an immediate lump sum "full and final" payment in advance rather than ongoing top up monthly payments, I don't know, it just occurred to me).
Scenario 1. MIL dies first. Flat passes to FIL as normal. He eventually dies and loan is repaid to lender - whether financial institution or the son.
Scenario 2. FIL dies first. Flat passes to MIL as normal. Is either sold then (according to due process with respect to her dementia) or is kept empty till she dies, and it is then sold. Loan repaid as above. Either way it means the equity in the flat can be used to finance better care experience for MIL, which ultimately is a prime concern.

Changing Wills would be changing FIL Will as normal (i.e. could be if I outlive my wife I want x y and Z to happen. If I predecease her, i want ab and c to happen). MIL's I have a horrid feeling that it is too late. This needs specialist advice of course.

Sats

[Satsuma]

A third option is to cash the lot in and have FIL move in with MIL to the home, paying his own fees until such time as he qualifies for local authroity support or the money runs out (or both).

FIL absolutely does not want to move in with MIL.
At 89 he cannot cope mentally or physically with the responsibility for her needs 24/7 and with her demensia she can be vile towards him and impossible to please. Hard to explain but I've been there and had to walk out after 5 hours, whereas he is there 24/7 and can't leave.
Even if he isn't expected to care, he is expected to be on-standy to call for help 24/7.

He can look after himself i.e. get himself food and drinks and get dressed and it's sad to say it but they are far better off living separately now.

But thanks for the suggestion, you weren't to know the circs of their relationship and needs.

That's absolutely his choice and no judgement from me at all as I speak as someone closely involved in an identical situation so I understand how difficult and emotional it is for everyone.

In our case, we went through the vile and impossible stage before they went into care (our sufferer was also a "wanderer" and would frequently be picked up by the public and police!).

It's just horrible and you and FIL have my sympathy.

Sats

[Satsuma]

ClitheroeKid - as it's a joint bank account (between MIL and FIL) can granddaughter take money out with permission of FIL?

I would be glad to be corrected by the estimable CK but I think joint accounts in theory are ok to withdraw cash from, although of course you are breaking the T&Cs of the account by revealing the PIN to a third party in the first place. It is a tricky line to balance, because if the bank find out, they may be obliged to act in order to avoid setting a precedent of letting one person off etc, which could be a complete PITA to unravel.

In our case, the Dementia patient has a lot of wealth in their own name, so the Spouse has got COP Deputyship, which has been worth it ten times over, as they are now able to legally and openly handle their affairs and pay for the care needed. It also helps with communication regarding the care and anything else, as the Deputy is effectively the other person and there's none of the ridiculous jobsworth Data Protection that people like to hide behind.