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

Good on her for living her best life 🤩 I hope I’m still going on holidays and renovating when I’m 87.

Assuming she is of sound mind it’s really up to her what she does with her money. Renovations and a nice holiday don’t sound like reckless spending to me.

Additionally - you said the majority has gone into home improvements, which hopefully is increasing the value of her property, and therefore she’s investing rather than frittering her cash away.

To move house and decorate? To go one one holiday? Hardly ‘unusual’

They think your mum is right because they expect you to pick up the pieces when it all goes tits up.

I do think you should be clear to your mum that if she depletes all her savings then she can't expect to move in with you or you provide daily care. At least then she has the facts.

Deprivation of assets is INCREDIBLY hard for Local Authorities to prove unless it is particularly blatant.

For example, what you can't do is give away huge chunks of property or money with no reason, for example signing the deeds to you house over to your children, even if you do this years before (7 year rule is for IHT, not care), if it cannot be justified for another purpose it can be counted as deliberate deprivation.

If however you, as the OPs mum has done, buy a property and spend thousands doing it up, and go travelling, that is of course fine - it would only be counted as deprivation if you did that knowing you imminently needed care - most healthy, fit 87 year olds only have a 1 in 4 chance of needing care, so can't reasonably know they will need it.

Most local authorities fund care in the self same care homes that paying patients use, so as a pp said, there is often no benefit to being able to pay.

As a relative you have no obligation to pay, you also don't have to use your home as payment if your spouse is still living, a relative who counts as a mandatory disregard (over 65 or disabled), some LAs also add a relative who has been a long term carer to this list. If any of those apply the home cannot be taken into account and will never form part of the funding.

My advice to your mum is to enjoy her home and travels whilst she can.

That’s a presumptuous statement. Maybe her mother’s priority is the here and now rather than what ‘may’ happen in the future. And that’s her decision.

I’m a nurse and have worked in both ‘good/private/expensive’ care facilities and ‘bad/council/cheap’ care facilities - the fact is they are all about as bad as each other unless you are extremely wealthy. Those expensive self-funded care homes are run by profiteering organisations that are often more penny pinching than councils. The council also often pay their staff more than minimum wage, unlike Bupa etc., which results in a higher standard of carer.

The council also often pay their staff more than minimum wage, unlike Bupa etc., which results in a higher standard of carer.

I viewed 11 care and nursing homes for my DM, and the Bupa one I viewed was in my bottom 4, it absolute stank of urine. I did give feedback when I got a follow up call to see if I was interested in the home.
I ended up picking a home that was the fifth most expensive in my list (£1600 per week) and that had the highest staff to residents ratio.

Equity release is not deprivation of assets😁
It would be releasing HER money which is tied up in the house, she wouldn't be trying to give the house to relatives or anything. I'm so glad my mum did equity release on her bungalow and really enjoyed the last few years of her life. She wasn't into holidays particularly, but absolutely hated cooking and that extra money enabled her to eat out every day.

Yes that's one way to look at it. If her health has a downward spiral (I hope she stays fit as a fiddle) then she's done you a favour by making the flat more desirable to sellers by making the interior upgrades.

By spending money on the flat she has probably increased its value and also probably increased the chance she can stay in her flat and not in a home for longer. She will not be able to travel for much longer so one expensive holiday will give her memories that help keep her happy and not so depressed she fades away.

If she wants to continue spending all her money then you are right to be concerned as it certainly does make finding good help or a good care home easier. But a single holiday and some prudent spending on enhancing her property so it's (hopefully) easy to care for doesnt sound excessive.

I think the figures for needing help are about half once you get past 80 but some of those are living in their own homes, maybe with a gardener and meals delivered.

You're not unreasonable for being worried. My grandma has passed her 100th birthday, and is completely out of cash. Nobody anticipated her living as long as she has so nobody realised it would come to this, but now the council covers most of her living expenses and the family has to cover the rest. It's still over £1K a month, which is a lot of money. Care homes are incredibly expensive, especially in the south east. She can't be moved to anywhere cheaper as she's far too frail for that. And it's caused ructions about who can and should be footing the bill.

It's going to be a massive problem in the future, but your mum could still have years left, and yes, you might end up with the bill for that.

This is what I'm painfully aware of, and thank you for not assuming I am a skinflint killjoy who begrudges my mum a little fun in her old age! I have literally been thinking we might regret the high end colour co-ordinated saucepans at the point where the money runs out.

But as has been pointed out many times, it's her life and her money. And I know I will still stick my hand in my pocket if we get to that stage. I will just have a little wry smile on my face as I remember the saucepans when I'm signing the cheque!

Care homes are incredibly expensive, especially in the south east. She can't be moved to anywhere cheaper as she's far too frail for that. And it's caused ructions about who can and should be footing the bill.

What happens if no one pays the shortfall?

Families are not responsible for paying care home fees for anyone except themselves. Children are not responsible for their parents finances.

If a person needs a care home the value of their property and any savings will be taken into account for their own contribution. If no one else lives in the house it will expected to be be sold and used toward care fees. If there is a spouse or another tenant the home will not form part of the care home assessment process.

Life is for living. What someone has left in assets at the time they need them will be taken into account. An 87yr old making her life and home more comfortable would not be seen as depriving assets.

Anyone who has over the limit in savings (approx £23k) will be expected to pay all, or a proportion of care fees.

A good opportunity for you to have a chat with her about her wishes should she become unable to look after herself at home.

But she's 87, she can spend it as she wishes. If necessary for residential care the flat will be sold.

The local authority has to pay. If the family put their foot down as they’re absolutely entitled to the council would have to discharge its responsibility. It’s a disgrace that it’s behaving like this. Anyone’s money would be gone by the time they’re 100 - colour coordinated pans or not.

Actually no, they don't have to pay the shortfall. There's a cap on what they'll pay - it's quite high, around £4K a month for the LA where my grandma is, but they absolutely won't go higher. The alternative if you can't pay the shortfall is to find alternative (and cheaper) arrangements. There are cheaper care homes available but who is seriously going to move a 100-year-old woman from the place that's been her home for years?

We looked at many different care homes for both FiL and my DM, and TBH the most expensive ones did not by any means strike us as the best. In particular I was usually under the impression that ‘smart’, ‘Homes and Gardens’ decor was there to impress the relatives who were choosing. (As we were, both DM and FiL having dementia.). IMO cosy and homely - with cheerful, friendly staff, were far more important, even if decor was a wee bit shabby round the edges.

The homes we eventually chose for both were excellent, and certainly not the most expensive. At both, self funders and LA funded received exactly the same care and accommodation. Admittedly the self funders were subsidising the others, but so be it. IMO it’s something of a ‘luxury’ to be able to self fund - you can choose the time and place, rather than having to depend on almost invariably hard-pressed social services.

£150k is not much for a care home. And lots of people never use a care home. At 87 I am going to make the most of every day, not worry about a future that may never come.

I feel like it's fair enough to get the flat how she wanted it and to have a nice "holiday of a lifetime".
However it's not fine to keep frittering a limited pot of money away on nonsense, if it's going to leave her in a difficult position later on.

Your could care foe her when the time comes especially at that age. Problem solved.
I am sure your will inherit from her so why not look after her.

@CueilleLeJour FWIW you seem to be very reasonable and have an appropriate level of concern.

The truth is nobody knows what will happen in regards to the last years of life. My philosophy as I get older is to have funds so that I can have choices.

My stepfather had no money or assets when he needed to move into assisted living. He got damn lucky and landed in a good place. But there are also places that truly horrific.

I’m just not comfortable leaving my end of life care up to the government and luck.

It's a mystery how there is any kind of care problem when it's so easy to solve.

Not sure what you mean by "especially at that age".

I have been involved in home care of frail elderly relatives and it can be a gruelling 24 hour a day commitment. I'm not saying I won't do that for my mum, but I wouldn't, for example, assume my own kids would do that for me when I am that age.

My great nan was very well-off - until she needed a care home. Then all that money that had been scrimped and saved for decades was spent in it's entirety on care homes. my nan then had to get loans out to cover the fees when all that money ran out. She lived a frugal existence only for her to get Alzeihmers and not remember the final decade of life. Let your mum have fun, the government's only going to rinse what they can from her money when she goes.

I’m sure it’s unlikely but how does the OP know she’ll be in a position to care for her mum. Let’s be honest all of have a chance (albeit small) of getting hit by a bus.

(Sorry @CueilleLeJour don’t mean to be a ghoul… I’m sure you’ll live a long and happy life 😉just pointing out that hope isn’t a plan)

Well you said holidays were deprivation of assets. What age does that kick in?

Just to be clear I think you are wrong, I think we are allowed holidays however old we are.