Spending downsizing cash

[CueilleLeJour]

I'm really not sure if I'm being unreasonable here.

Mum is 87 and downsized a few years after we lost my dad. She bought a nice little flat and had £150K from the sale.

Growing up, we never had much money and dad kept a close hand on the purse strings. Mum was left with a comfortable but not huge pension, and some moderate savings which she has spent over the last few years.

Since downsizing, she has basically had access to more free money than she's ever had in her life. In the last year, she's spent nearly half the £150k. Mostly on the flat - new kitchen, bathroom, carpets, furniture, professional decorating etc - but also an expensive holiday. It's clearly been an amazing feeling for her to have all the money she could dream of and spend it without my dad's disapproving eye peering over her shoulder. Part of me thinks it's great and she should just enjoy it while she can.

But part of me is really alarmed at her getting through half the proceeds in a year, and I worry about possible future care needs. My BIL's mum is 90 and has been in a care home for 3 years and it's just burning cash. They wouldn't let her in without proving she had 2 years of costs up front - which I think was about 140K.

My mum is just convinced she won't ever need a care home, and I know she's better off than many people who have nothing put by. It's also really none of my business, it's her money to do what she wants with. It's not dementia or anything, just someone who has never really had to make financial decisions having a whale of a time splashing the cash.

But am I right to have a little anxiety about it all?

YABU You only live once, she's right to spend it while she can
YANBU It's a bit reckless to spend half your downsizing profits in the first year

I understand your point but if I am widowed, not unlikely as DH is ten years older than me and in poor health but we can't tell the future, I intend to downsize and give a chunk of money to my kids not to avoid tax/care fees etc but because I'd like to see them enjoy it. I'd still have a property to sell plus my pensions and half of his pension that would come to me would pay any fees for a good long while.

It’s not that it’s a ‘free bar’. My mother has worked tirelessly all her life to own her own small home and have modest savings. She is still working now aged 70. The current rules would mean she would have to use her entire house value and savings to fund her care, while those with more equity/larger estate are allowed to keep hold of a large portion.

She could so easily have been in receipt of benefits throughout her life and would have been financially better off for it. But she chose to set a good example to her children by working for what she has and paying tax her whole working life. So she is, rightfully, rather annoyed that others, who have chosen not to work/pay taxes, will receive free care while she would need to sell her modest home.

So at what age do we all need to stop going on holiday and decorating our homes? Are we only allowed to do those things once we have £1m saved for our elderly care?

it’s more morally repugnant to be so against funding elderly care as a tax payer.

I wholly agree that we need a national conversation because the present system as far as I can see, takes advantage of vulnerable people, giving them no choice but to sell everything they’ve worked for during their lives to pay astronomical and out of control care fees. But that doesn’t mean I think it’s right for people to abdicate responsibility for their own care within the present system by essentially frittering away their savings and then expecting others to fund their care when the time comes.

The attitude of some towards elderly care is awful. It should absolutely be funded by the tax payer, as education is for children and care for under 65s. So this lady has my permission to ‘fritter away’ her equity and use my taxes towards her care.

Why do we suddenly expect to self fund care due to age alone?

The system we have at the moment dictates that any savings and property be used to fund the care needed, until the funding pot drops below the threshold for Local Authority contribution.

The answer to your question is in the legislation regarding care funding. Specifically if you dispose of savings and assets at a time when there is a reasonable expectation that you will need care, that is deprivation of assets and you run the risk of the Local Authority treating those assets as still in your possession for the purposes of their financial assessment of your ability to pay - thereby reducing your care options.

So in the case of the OP’s mum the LA would probably take the view that at the age of 87, with all the attendant risks of aging, she has a reasonable expectation of needing care. Burning through her savings at a rate of knots would likely be viewed as deprivation of assets. In her case, she has a flat to sell, the proceeds of which she could use for care, but given the cost attached to residential care, the addition of the £150,000 she currently has, would ensure that she has more than the basic options open to her for longer.

A close relative was recently assessed for care. It involved providing bank statements to prove income and savings. He’d recently spent a large chunk of his savings which prompted an investigation as part of the financial assessment. That threw up some reckless spending and the LA included the full amount in the financial assessment. As a result he couldn’t provide proof of the required upfront funding for residential care and the LA would only provide home based care, which doesn’t assess property or savings below £14,500.

Even home based care is expensive. My own mum has LA carers coming in three times a day. She has no savings and her only income is state pension, pension credit and attendance allowance. Her weekly contribution has been assessed at over £120 regardless of how many care visits per day she receives - you pay the same for the minimum as the maximum. It’s a minefield.

Attitudes are irrelevant while we have the system we have now. Frittering away your savings will leave you dependent on the state, which will only provide the basics, not what you would necessarily want for yourself. It also puts the burden on those who are self funding their own care, because they also contribute to the care costs of those who have no means. I don’t understand why people advocate spending everything you have and giving yourself little choice as to how you are treated when you are at your most vulnerable.

I do know most of this as have worked in the care sector as a nurse.

I disagree that having one holiday is ‘reckless spending’. But it sounds like what you’re saying is that if a person spends their funds throughout their younger years, and therefore has no savings, that’s (in the councils opinion), acceptable. But they may begrudge an 87 year old woman one holiday before she dies… and you agree with this?

That’s surely up to the individual and where their priorities lie. Basics now or basics later? When someone is at the stage of needing 24 hour care, there isn’t much requirement for more than the basics. I’d much rather enjoy the time I’m fit and well to the maximum than afford to have my hair done weekly in a care home

But as previously mentioned, it isn’t down to the individual to decide what the LA view as unusual spending, and therefore deprivation of assets. And at the moment they are so strapped for cash that the rules are being applied to the letter. The whole system needs an overhaul.

It’s not a question of having the funds to have your hair done in a care home. It’s the basics that cost the money - here it’s in the region of £1000 a week. And if you can’t provide proof of the means of meeting the upfront fees you will very likely be turned down for residential care if the local authority can get away with cheaper care based in your home. For many people that means bedbound and relying on carers coming in four times a day to change and feed you, and at night being put in a nappy until the morning care visit. And with their only hope of residential care being as a result of a fall, proving it’s too dangerous to be left alone at home. That, from my personal experience, is where we’re at now. There’s a real lack of understanding of what goes on in the real world here.

I was responding to your statement that government funded care would only provide the ‘basics’

I know what goes on in the real world, I’ve worked in many care homes. My grandmother was in a very good home for 7 years entirely funded by the local authority. Someone self funding doesn’t result in better care unless you are extremely wealthy.

I’m not talking about the difference of standards of care within a residential setting. I’m talking about the difference in being able to afford residential care as the most appropriate option by self funding, rather than having to rely on the local authority who will most likely want to provide carers in your own home.

In this area at least, residential care at the expense of the council is a last resort and home care is the norm, regardless of whether it’s the most appropriate option or not, because it’s cheaper and doesn’t involve assessment of assets beyond income and savings, and in most cases the person being cared for has to make a contribution from their income. I have a friend whose mother, having no assets, at the age of 91 was assessed as needing home care - carers four times a day and a brief check at night. She was a known fall risk and only received council funding for residential care after she was admitted to hospital with a broken hip and pelvis.

I agree that the care system is broken and gouges vulnerable people with exorbitant fees, but my point is that while it’s the system we have, people trying to circumvent fees when they’re perfectly able to pay, push the burden onto others and make the problem worse. I don’t understand why anyone with the means to ensure appropriate care would want to leave themselves open to a miserable old age by deliberately skinting themselves and then relying on the state to pick up the tab.

Yes. In my experience the LA will look more carefully at the spending habits of an 87 year old because at that age they have a reasonable expectation of care needs - that’s clarified in the wording of the legislation. That doesn’t mean that those who spend their funds throughout their younger years should be considered ‘acceptable’ because with the care system as it is, and until such time as later life care is properly financed in some other way, it’s incumbent on everyone who is reasonably able, to make provision for themselves if we’re not to push the burden onto others. And no, I don’t agree with it. At all. As I’ve stated several times.

I think that’s fine as it goes. But at what age will you downsize and give away the difference to your kids ? Because, as mentioned by a few pp’s, the Local Authority may not agree that the intention wasn’t to avoid care fees if you’re at an age when you could reasonably expect to have care needs.

I’ll give you an example. SiL lives with her elderly mum - they each owned fifty percent of the home they live in until her mum decided to sign over her half to my SiL five years ago. SiL is disabled and can’t look after her mum alone as her needs are increasing. She arranged home care with the LA and during the financial assessment she was told that if her mum needed residential care at any point, although normally she would be assessed as though she still owned that 50% share, because SiL is disabled and permanently resident/part owner of their home, they wouldn’t count it as an asset.

However, If SiL decided to downsize after her mum went into full time care, any profit from the sale would have to be used towards care fees as the arrangement only applies to the original home. The adviser said she has seen the local authority take action against relatives to reclaim money and also against people who have downsized and given the profits to children. It’s that all important question as to whether you could reasonably have expected to have care needs, at the time you took that action. And that decision rests with the Local Authority. Given how strapped they are for funding these days, I think application of the letter of the law will be their default.

@Lovelysausagedogscrumpy very few people can pay for care homes except by selling their house. The costs are enormous.

BUT, holidays make sod all difference to the LA delivering care, the Adult Social Services have a legal obligation to provide care - they can't refuse if it is a real assessed need. If they find evidence of deprivation of assets, in reality they will still have to provide the care in the end. In the meanwhile they will try and recover the assets, but if its been spent on holidays it won't be retrievable

As your SiL is disabled, she gets a mandatory disregard, meaning the house value cannot form part of the assessment.

You are correct that if she moves during the disregard period (whilst her mum is still alive) then they can go after the 50% because the disregarded house was in effect liquidated to cash which can't be disregarded

After mum has died though, that's it, the house is your SiLs free and clear, as it never formed part of the assessment, never had a lien placed on it etc..

As they owned the house 50/50 it's unlikely the LA could have forced the issue even if she was not disabled, they would first have to work out the value of 50%, which is not actually 50% as its not worked out that way, it can be nil. Then they would have to get an order for sale, and as they cannot render anyone homeless, house her.

As soon as you have more than one owner it gets very complicated, and potentially very expensive for the LA to do anything, of course the common scenario is husband and wife without younger people involved, generally they now use a DPA, where a charge is placed on the property at the agreement of the owners, and collect when the person dies.

Worth adding that LAs are very circumspect over taking legal action, they have to be careful not to waste public funds, and taking action costs a lot of money - more importantly judges are split in their view on these cases, a good few have gone against the LAs (for example the Palfrey Case), every one that goes against establishes a tranche of case law that impinges on the LAs likelihood of a favourable outcome.

Therefore they are likely only to use threats, in the hope the opposition will crumble, if they don't cave in, normally the LA will fold up their tent and move on after a few years of threatening noises and cut their losses.

In the pp's case, her SiL had a bona fide disregard, under no circumstances should the adviser have been making aggressive noises, she has a disregard, that's it, case closed.

She sounds like she's having a great time, you only live once..maybe see if she wants some company on her next trip 😉

My point is that if you dispose of your assets you’re throwing away your ability to choose what type of care you receive. While the LA has an obligation to provide care, they won’t pay for residential care if home care will suffice. So yes, it’s a conscious choice. Either make provision for your own care and have some autonomy or run the risk of ending up trapped in your own home and reliant on carers coming in for a few minutes three or four times a day to provide a basic level of care.

I understand your concerns but she’s probably trying to make her life a little better in her twilight years. I’m sure now she has updated everything she will probably keep some funds past for future needs. I’m sure if she does need care in the future you’ll be glad she had some fun with her money as it’s probably her last chance to do this. X

The third option is to sell your own home - which you no longer require - and use the proceeds to pay for your care. Which is presumably OP’s mum’s intention. I imagine that her motivation in downsizing in the first place was to free up some cash to live a little.

It's a long thread now so I understand you won't have read it all, but as I said above, I'm going on the expensive holiday with her as she might have found it a bit much on her own. I'm really happy to have this precious time with her while she is still relatively active and healthy. It's costing me an arm and a leg and I would never spend that on my own holiday, but am happy to do so as for me it's a one-off.

That was absolutely the intention, as I've said before I'm just concerned that it is quite reckless to spend half of it in a year. If she dies in the next year or two, she has called it perfectly. If she lives another 10 years, not so much.

And interestingly, the ONS says that a woman who's reached 87 today will on average live to be 93. Which is very lovely to read as all these posters saying "you'll be sorry if she drops down dead" have made me feel we're about to lose her any minute!