To not pay their air fare

On them staying with you, I wouldn't even offer 2-3 nights. Just say it's not possible due to other commitments. It's hard work being a carer and you're doing a lot already. Keep your home free of the stress.

I think for me, morally at least, it depends how the allowance to the grandson is set up. OP calls it an allowance while he’s at uni, so it sounds like it could be fairly regular. If her parents said “we’ll help you through uni” and then set up a monthly payment that automatically goes out, I think it’s fine to keep that going.
If it’s ad hoc “mum I’m a bit short of cash, do you think grandma and grandad would mind giving me some” and then OP transfers the money, then no.

Agree with @SummerSally about making the new constraints clear and that suggested message is good. So previously they've had flights covered and accommodation for free with you? I think it's an acceptable step away from that to say 1K towards flights and pay your own accommodation. They are adults and I assume they do other things besides see your dad while they're here. I think it makes sense to talk in terms of this probably being the last time they come in this way. Personally I would not expect them to come over for a funeral.

Do you have POA? You’ve not said. If your DF does not have capacity and you’re now making this decision on his behalf, I think you need to tread very carefully as using money for purchases like a cousins airfare may be not only be considered a deprivation of assets but actually financial abuse and a mismanagement of his money. If you don’t have POA and he doesn’t have capacity, then you have no right to give them that money anyway.

Maybe offer to pay for her to come over but not her DH?

Also - make sure you have a plan to set money aside to help pay flights if they wish to visit for the funeral(s). Sorry to be blunt about that but the time they WILL need financial help is when they suddenly need to book a last minute flight for a funeral - never cheap. Once your dp dies, check what happens to bank account - it may be frozen and as executor you can apply for money for funerary costs but I’m not sure if that extends to flying family members over to the Uk. Worth checking.

I'm quite sure that funeral costs claimed from the estate do not cover the costs of travel to the funeral, so forget this. You can get video recordings streamed for people in other countries.

If your DF still has capacity it is his choice.

If he doesn't and you have POA you could justify the expenditure/gift, as this is something he has always done and maintaining the family relationship is on his interests. Equally you could say no on the basis that your parents' situation has now changed - could contact be facilitated instead by a Zoom call on an ipad?

It sounds as if fares will be expensive if £1K won't cover them. The question is - realistically how much pleasure would your father get out of their visit, and is it proportionate to the cost? He presumably saw them around a year ago. He has dementia. Is he even going to remember any visit from them?

I’d reply and say, ‘It would be lovely to see you, but we can no longer cover the costs of flights and accommodation as the funds are required for their care and medical expenses’.

@TheresMillionsOfGeoffreys if both dp have dementia and poor physical health and from context that OP is fully responsible for care I’d expect she must have financial power of attorney

You sound lovely Op. What a tough situation and so much responsibility.

Having read loads of threads on MN over the years, it’s ALWAYS best to avoid playing games. Don’t make them ask for the fare. Do make the new constraints clear.

If you are managing your df bank account, I would be really honest and say:

“I have a bit of a dilemma. I know dad is still capable of enjoying a visit from you at the moment and I know in the past he’s been able to help you out with costs. At the same time DPs savings need to be carefully planned so that they can afford the specialist (ie expensive!) care they need for as long as they need it. It is exhausting and stressful trying to help dp with these decisions. I think they can afford to make a contribution to your flights this year, so if you can find enough money to pay for your accommodation and food, then I think dad can afford to send you up to £1000 to help with flight costs. I can send you some suggestions of places to stay if that helps. If you’re able to come, you should spend as much time as possible with dp because at the moment it still helps dad to see familiar faces. Sadly I can’t be sure what will happen next year so we are busy making the most of the time we have got now.”

Also - make sure you have a plan to set money aside to help pay flights if they wish to visit for the funeral(s). Sorry to be blunt about that but the time they WILL need financial help is when they suddenly need to book a last minute flight for a funeral - never cheap. Once your dp dies, check what happens to bank account - it may be frozen and as executor you can apply for money for funerary costs but I’m not sure if that extends to flying family members over to the Uk. Worth checking.

If you have POA, funds need to be used in your parents best interests. TBH the air fare sounds like it would be because it would bring DF joy. Your son’s allowance less so… there’s something rather unsavoury about scrimping on things which will bring your father pleasure but not on things which benefit your son.

I think that’s a typo and it’s OP’s husband that doesn’t like the cousin’s husband.
OP’s husband also says it’s OP’s money, so I think his motives are clear.

If you have POA it’s an easy no if not I think you have to go with what your father wants.

I would pay, its clearly what your DF wants - and he is extremely unlikely to live another 8 years, so paying for these flights realistically going to impact his ability to pay for his care.

Are you thinking about your inheritance?

I think it would be very mean of you to deny your DF something that would bring him joy in the last years of his life.

Payments to your son and payments to your cousin need to be treated the same. Either they're both OK or neither of them are OK.

Given that you seem fine to dip your hand into your DPs money for your son, you should fully fund your cousins annual trip as your DF always did when he was able to make the decision/payments himself.

If you are limiting/stopping payments to your cousin, your should also limit/stop payments to your DS.

You seem to be making decisions in your own best interests, rather than "what dad would want". If you have POA, this is not allowed.

Absolutely not.
They have had years of trips and your father doesn't like her husband.

You are their daughter so of course they will be generous.

I think you need to be sensible, not offer anything and tell them that things have changed.

Your father would love to see them but they need to pay for themselves.

This sounds like its been a free jolly for years.

If DF has always paid and the cousin thinks of him almost as a father and they don't have much money I would pay. It may be the last time they get to see each other. It is still his money and he has always paid because he wants to see them

They need their money for care so I don’t think you can just spend it on air fare?! Do you want them to come over and visit your dad? How important are they to him? If it’s really important then yes do it. If he wouldn’t recognise them then explain he doesn’t have the funds for airfare right now, but you’re welcome to stay at mine again to make it cheaper.

The 7 year rule relates to inheritance tax and is nothing to do with local authority care home funding and deprivation of assets. If the parents run down their savings and need contributions from the LA a financial assessment will be carried out and they will go back over years where the parents would have knowledge that they would need residential care. So they will be scrutinising expenditure certainly for all the years they have been in care irrespective of how long that has been. It is likely they will go back to the dates they received diagnoses of dementia as at that point they would have become aware there was a very high chance of them needing residential care.

I know in Scotland the principle is that if you have an adult who lacks capacity it’s your responsibility to make decisions that are consistent with with their wishes, if you know what their wishes were and it’s possible to do so. I’d check the position in whichever nation you live in.

On that basis I’d continue paying for flights because you know the parents did so for many years. It’s not deprivation of assets if you can show a pattern consistent with their wishes. It would fall under the same principle that continues to pay your DC an allowance. I think you’d find it hard to argue that funds to your DC was ok but funds to another relative given over a period of time for a particular purpose isn’t.

What happens when the money runs out? Would it be a case of selling property you have earmarked for yourself?

I think you’re being a bit unreasonable because you don’t like them. But your father clearly does and it’s his money.

Do you have POA or are your parents still capable of making their own decisions about finances?

If you have POA it probably falls into gifts that you would need to get approved by the court of protection (which can be expensive to get) even if they have gifted in same way previously. Info here https://www.gov.uk/manage-lasting-power-attorney/property-financial-affairs

If they make their own decisions still, then it’s obviously up to them.

If they aren’t capable of making their own decisions and you don’t have POA you would need to apply to court of protection for permission to manage their affairs anyway.

OP you haven't answered whether you have POA? Are you responsible for managing your parents' money?