Living with dementia has huge financial implications. It can affect your personal finances, those of your family and even that of wider society. In fact, the financial impact of dementia spans everything from funding specialist care to safeguarding assets, and the day-to-day handling of money.
In the UK today, one in six people over the age of 80 has dementia. Overall, there are 850,000 people with a formal dementia diagnosis and this figure is predicted to rise to more than 2 million by 2050*.
Whether you’re contemplating life with dementia, caring for someone else, or simply putting contingency plans into place, it’s important to understand all of your options.
What are the costs associated with dementia?
Someone with dementia may require support with any or all aspects of life, such as washing or eating, either at home or in a care home. This is classed as social care, rather than care provided free by the NHS, and is sometimes referred to as a ‘dementia tax’.
High costs and the need to carefully manage money can leave those with dementia vulnerable and create significant challenges for people close to them. It is much easier to deal with these hurdles if you already have a plan in place. That’s why we always encourage people to think about and plan for the future, however hard it is to visualise difficult times.
Why is having a lasting power of attorney important for someone with dementia?
A power of attorney is an important legal document giving someone permission to manage your affairs if you are not in a position to do so yourself. If you have an accident or develop an illness – such as dementia – and don’t have one, it could be difficult for those around you to deal with your finances.
The importance of a power of attorney is something to think about during the early stages of dementia. Since mental capacity is required to set up a power of attorney, leaving it too late could cause problems in the future.
Can you make a Will if you have dementia?
People with dementia are still able to sign legal documents relating to their financial affairs providing that certain criteria are met. It is possible to make a Will when you have dementia, so long as you’re capable of making your own decisions and fully understand the implications of them. In order to be legally valid, a Will must be made voluntarily, in writing, and with a sound mind. Having a Will is also vital to effective estate and inheritance tax planning.
Can you change your Will if you have dementia?
It is possible to make changes to your Will after a dementia diagnosis. However, you’ll need to prove you fully understand any changes you’re requesting and that you’re not being forced into a particular decision. Any changes you make will also need to be signed and witnessed.
Do dementia patients pay for care?
Someone with dementia will pay an average of £100,000 over their lifetime for social care, and more if in a residential care setting*. Under the current system in England and Northern Ireland, unless you have less than £23,250 in assets, you would generally be expected to cover the cost of your own care. In Scotland, the threshold is £29,750, and in Wales it’s £24,000 if you receive care in your own home or £50,000 if you receive care in a care home.
It is proposed from October 2025, there will be a cap on care costs of £86,000. It is important to bear in mind that only the costs of your personal care needs will be covered by this cap. You will remain responsible for meeting your daily living costs, including rent, food and utility bill, even when you reach the cap.
How can Evelyn Partners help with later life financial planning?
At Evelyn Partners, we have financial planners who are specialists in helping people during later life. They hold the Later Life Adviser Accreditation and follow a strict code of conduct from the Society of Later Life Advisers (SOLLA). Their qualifications are independently audited by the Financial & Legal Skills Partnership, a government body.
Whether you need immediate and urgent help, are looking at different options or are planning for the future, we can help you. Book a no-obligation consultation online or call us on 020 7189 2400.
*Source: Alzheimer’s Society, 2020
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.