Money and Legal Matters 3 - How people with dementia can plan for the future

Introduction
Plan ahead
Powers of attorney
Making a will
Advance statements, advance directives and living wills
Trusts
Your house
Funeral arrangements
Other arrangements
Collecting pensions and benefits
Summary

Introduction

This section is for people in the early stages of dementia and their family and friends. It looks at how people with dementia can make their own decisions about who will look after their financial and welfare affairs in the future, if they can no longer manage. It also looks at how to make handling finances simpler. The sections after this one are concerned with people who have moderate to severe dementia, and are for carers or relatives who are helping with financial or welfare matters.

Plan ahead

Making plans as early as possible is very important. If you have dementia, you have the same right as anyone else to make your own choices. Making some decisions now can also help avoid trouble and expense for your friends and family later.

Dementia is progressive, and later on in the illness you may no longer be able to make these arrangements. Put your financial and legal affairs in order as soon as possible. It is a good idea to see a solicitor, who can help with powers of attorney, wills or drawing up a trust. See Further help, for how to find a solicitor if you don’t already have one.

Powers of attorney

A power of attorney is a document in which you appoint someone you trust to look after your affairs. The person you give the power to manage your affairs is called your attorney.

Powers of attorney are the best way for you to have maximum say in what happens if one day you can’t make decisions yourself. Until that time, you are in control. Keep the document safe, and make sure someone you trust knows where it is.

The Adults with Incapacity Act makes it possible to have two powers of attorney. You can have one for your financial matters (a continuing power of attorney) and one for your personal welfare (a welfare power of attorney). You don’t have to choose the same person to do both.

You should talk to whoever you want to be your attorney, to make sure he or she is willing. You don’t legally have to do this, but the power must be registered with the Public Guardian before it can be used. The Public Guardian will not register a power unless he or she is satisfied that the attorney named is prepared to carry out his or her duties as attorney. If the person refuses, it might be too late to choose someone else. It is wise to register your power of attorney as soon as possible after the document is signed to ensure that it is complete and correct.

It is a good idea for everyone – whether or not they have dementia – to set up powers of attorney, in case of illness or accident.

A person can grant a power of attorney only if capable of understanding what he or she is doing. This means if you have early dementia it is very important to consider giving someone power of attorney as soon as possible. No-one, not even close relatives, can arrange power of attorney for someone else, so it must be done while you are able to express your own wishes. Later on it may be too late.

If you or your potential attorney would like more information on the role of the attorney, the Scottish Executive has published a code of practice (see Further reading).

It is possible for you to draw up a power of attorney document yourself although you may find it easier or more reassuring to use a solicitor. You can find sample power of attorney documents on the model powers of attorney page of this website. The Office of the Public Guardian also has sample powers of attorney and sample lists of powers on its website. The Code of Practice for Continuing and Welfare Attorneys also provides a list of possible powers to include in the document (see Further reading).

If you do draw up the document yourself, it must incorporate a certificate by a solicitor or other prescribed person such as a doctor stating:

• that he or she has interviewed you, the granter, immediately prior to the signing of the document;
• that he or she is satisfied, because of his or her own knowledge of you or having consulted other named persons who know you, that you fully understand the nature of the powers being given and the extent of them; and
• that he or she has no reason to believe that you are acting under any influence or any other reason which should prevent the powers from being given.

Who to choose as your attorney

Think about who you would like to be your continuing and/or your welfare attorney. It should be someone you trust; for example:

• your partner
• a family member
• a close friend
• a firm of solicitors could be your continuing attorney, although your welfare attorney has to be an individual.

It is a good idea to appoint joint attorneys to work together, or a substitute attorney to take over if the original one resigns or dies.

The Act says your attorney must always take your wishes into account when making decisions on your behalf, so it is important to make sure he or she knows as much as possible about you and your preferences. However, your attorney doesn’t necessarily have to follow your wishes, for example if circumstances change.

The code of practice for attorneys gives a lot of practical information about the type of things which you should consider.

A couple should each grant separate powers of attorney, although they can choose the same attorney(s). They may wish to appoint each other, perhaps with another family member or a solicitor jointly or as a substitute.

Continuing power of attorney

A continuing power of attorney only covers your property and financial affairs, and gives no power to take other personal decisions (see Welfare power of attorney).

The document must specify exactly what powers your attorney is to have, so check with your solicitor that all the necessary powers are included. You might list the powers you want to give, or you might give your attorney a general right to deal with all your financial affairs. But if you want him or her to be able to deal with property, such as your house, the power of attorney must say so specifically. For example, powers could include:

• paying bills
• collecting pensions and other money due to you
• dealing with bank or building society accounts
• having access to important financial information
• buying and selling investments and other property, including houses
• signing documents and entering contracts
• managing direct payments for community care services
• bringing or defending legal actions, for example, in the case of an accident
• making gifts of specified amounts to named people
• expenses for the attorney.

A continuing attorney cannot make a will for you, take decisions on personal welfare, such as care or medical decisions, make gifts to him or herself or to anyone else (unless specifically authorised to do this), appoint a successor or do anything the power of attorney document does not list.

You can choose to have a continuing power of attorney operate straight away, while you are well, for convenience. This does not prevent you continuing to run your affairs while you are able to. Or you can specify that it can only be used after a particular event, for example if a doctor certifies that you have become mentally incapable of running your own affairs. This is known as a ‘springing clause’ and can be used in two ways:

• you can state that the power should not be registered with the Public Guardian or used until the specific event has occurred, for example your lack of capacity has been assessed by your doctor.
• or you can have the document registered immediately but specify an event which must occur before it can be used by the attorney.

The first option offers additional protection as the attorney does not hold the certificate until proof of incapacity is provided. However, because the power cannot be registered before the ‘springing’ event occurs, it will not have been checked by the Public Guardian. If it turns out to be incorrect, the attorney will have no power to act at all. If you have been assessed as lacking capacity then you will be unable to authorise any corrections to the power of attorney.

If you say that you do not want your continuing power of attorney to be used until after you have become mentally incapable, you must include a statement saying that you have considered how you would want your incapacity to be determined. The statement need not say how you would want it to be determined (although this would be sensible), only that you have considered it.

Welfare power of attorney

For a welfare power of attorney, you also choose what powers you want your attorney to have. For example, some or all of:

• deciding on your care arrangements
• making decisions on your clothes, personal appearance, diet, leisure activities or holidays
• deciding where you should live
• having access to confidential or personal information about your welfare such as health records
• consenting to medical treatment
• consenting to you taking part in research
• bringing or defending legal actions to do with your welfare.

Welfare attorneys can only take on their powers if you become incapable of taking these decisions yourself. All welfare powers of attorney granted after 5 October 2007 have to contain a statement that the granter has considered how he or she would with their incapacity to be determined. The statement does not have to say how it should be determined (although it would be sensible to do so), only that the person has considered it.

Under the Act’s principles (see Introduction - chapter one) your welfare attorney must always take your wishes into account when making these decisions, so it is important to make sure he or she knows as much as possible about your likes and dislikes. For example, talk to him or her about your personal welfare concerns, such as medical conditions, how you would hope to be cared for in the future, religious or spiritual matters, any particular difficulties in family relationships and your preferences for diet, appearance and holidays. Ask him or her to keep a note of your wishes. However, your attorney doesn’t necessarily have to follow your wishes, for example if circumstances change.

Creating a power of attorney

1. Discuss your plans with your friends and relatives and any professionals you are involved with.
2. Talk to the person or people you want to appoint as your attorney and make sure they are willing.
3. See a solicitor if you would rather not ‘do it yourself’. Ask how much it will cost before you start – all solicitors must provide this information if they are asked.
4. Discuss with the solicitor what powers you want to include. If you are naming the same person as your continuing and welfare attorney, the cheapest way is to do both at once in the same document. Or you could name different continuing and welfare attorneys in separate documents but at the same time.

A fairly standard power of attorney may cost £150 - £250, or sometimes more, depending on the time spent by the solicitor and the cost of any doctor’s certificate, if the solicitor feels the need for further evidence of your mental capacity. Ask for an estimate of the cost before you start. People on Income Support, Pension Credit or on a low income may be able to get help to cover the cost through the Legal Advice and Assistance scheme.

The solicitor will draw up the power of attorney document for you to sign. As a safeguard, it has to include a certificate from a solicitor or doctor. This is to certify that he or she spoke to you just before you signed and that you understood what you were doing and were not under anyone else’s influence. This person can’t be who you appoint as attorney. This is to help prevent anyone taking advantage of someone who is vulnerable. If you are granting separate welfare and continuing powers of attorney, you will need two of these certificates. If it is both a continuing and a welfare power of attorney, you need only include one certificate.

A continuing power of attorney must say in the document that it is meant to be continuing – that is, that it will still work if you become unable to manage your own affairs.

Your attorney will need to register the power with the Public Guardian (see Further help). This can be done right away unless the power states that it can only be registered at a certain time or after a certain event (for example, if doctors certify your mental incapacity). There is a form for registration, and the fee is currently £60. If both the welfare and financial powers are covered in one document there will be only one registration fee to pay.

To use the power of attorney, your attorney will need to show a copy of the document provided by the Public Guardian together with a certificate of registration. If it isn’t registered with the Public Guardian right away, you should make sure your attorney knows where the document is, so that he or she can find it when it is needed, and get it registered.

For more information, see Using a continuing power of attorney and Using a welfare power of attorney .

If you had already made a power of attorney before April 2001

Powers of attorney written after January 1991 will still work if you are mentally incapacitated unless they specifically say not. They do not have to be registered with the Public Guardian. Generally, existing powers of attorney cover only financial matters.
Your attorney should still manage your affairs according to the principles of the Act, but there are fewer safeguards. However, if necessary, a court could order that your attorney is supervised by the Public Guardian or that a guardian is appointed to take over from your attorney.
Consider asking your solicitor to draw up a new continuing power of attorney, so that you are fully safeguarded. Think about appointing a welfare attorney as well.

Safeguards

The Public Guardian is responsible for safeguarding your interests to do with property or financial affairs. He or she can investigate any complaints about how a continuing power of attorney is being used or concerns that your property or financial affairs may be at risk.

Your local authority can investigate problems with a welfare power of attorney.
You can terminate your attorney’s appointment at any time, provided you are not mentally incapacitated. It is wise to have a clause in your power of attorney which makes this clear to the attorney. Terminating the attorney’s appointment is best done in writing. Your attorney should then notify the Public Guardian. If the attorney is not prepared to do this, or if you have lost contact with him or her, send a copy of your letter to the Public Guardian explaining the circumstances, and he or she will deal with it.

If your attorney is taking decisions for you, but you are worried about what he or she is doing, you can complain to the Public Guardian (for all powers of attorney covering financial matters) or the local authority or Mental Welfare Commission (for welfare powers of attorney). They will investigate. Anyone else who is worried could also complain. You can phone to discuss the problem, but put your complaint in writing if you want it investigated. See Further help, for contact details for the Public Guardian.

Making a will

If you do not have a will already, you should make one while you are able. Even if you are not wealthy, a will is useful to leave personal belongings to friends or family members who will appreciate them, and there is often insurance money to come in. Otherwise, your possessions will be divided after your death according to fixed legal rules which may not produce the result you want. The absence of a will can cause extra worry, expense and delay after someone dies. If you already have a will, but it was made some time ago, you might want to review it in case you want to make any changes.

Wills are best prepared by solicitors. The fee (about £60 - £100 for a simple will) is well worth it because of the risks of making a mistake with a home-made will or a will form. Ask the solicitor how much it will cost before you start. People on Income Support, Pension Credit or on a low income may be able to get help to cover the cost through the Legal Advice and Assistance scheme. Some solicitors will visit if you find it difficult to get to their office.

Before you see the solicitor, think about what property you have and how it is going to be divided and make some notes. This helps give clear instructions to the solicitor. Choose an executor (a person to manage your estate when you die). You may want to bear in mind that in some cases choosing the same person as attorney and executor might cause a possible conflict of interest – your attorney should be spending your money for your benefit rather than saving it up for someone else to inherit.

If you want to change your will at any stage, see a solicitor. Your solicitor may want your doctor to certify that you are still mentally capable enough to make or change your will.

You could consider leaving a legacy to a charity in your will, which can reduce Inheritance Tax liability on your estate. Alzheimer Scotland benefits enormously from legacies each year that help maintain and develop our work in Scotland. All gifts to charities are tax exempt.

Information about Alzheimer Scotland's will-writing service

Advance statements, advance directives and living wills

You may have wishes and preferences about your future care and medical treatment which, because of the progression of the illness, you may be unable to communicate later on. Discuss these with your welfare attorney, if you have one. You can also write down your wishes in the form of an advance statement, and/or an advance directive or ‘living will’.

An advance statement allows you to state, in advance, the kind of care and treatment you would authorise for yourself, in the event of you being unable to choose or express your wishes. The statement might include your preferences about particular drugs or for being cared for in a particular way. An advance directive, sometimes called a ‘living will’, is the term usually used to describe instructions for refusing a specific treatment or treatments in certain circumstances. The sorts of treatments commonly covered by advance directives are artificial feeding, mechanical ventilation, antibiotic therapy and resuscitation.

It is a good idea to discuss your advance statement and/or directive with your doctor and give him or her a copy for your file.

Advance statements or directives should be regularly reviewed and updated to take into account medical advances and new drug treatments, as well as changes to your own views and preferences.

Under the Adults with Incapacity Act, doctors must take your past wishes into account when deciding what treatment to give you. If you have strong feelings, an advance directive is one way to make them clear. The British Medical Association has also advised doctors to take account of advance directives when deciding on treatment. This will mean that your wishes should usually be followed, but the doctor is not bound to do this if he or she believes it would be against your best interests or cause pain or suffering.

The Mental Health (Care and Treatment)(Scotland) Act 2003, which came into force in October 2005, gives the right to someone with a mental disorder to make a particular kind of advance statement about the treatment he or she would prefer to receive, or not receive, for that mental disorder. For more information see Chapter 5.

See also our information sheet on Making decisions about future treatment.

Trusts

A trust is created when money or property is handed over to trustees with instructions to them to hold it for the benefit of somebody else. The trustees may be relatives, close friends, a solicitor or other professionals.

Trusts can be useful where someone receives a sum of money but can’t manage that money themselves. They can help to ensure that the money is used to benefit the person concerned.

You will need a solicitor to draw up a trust deed. This deed creates the trust, names the trustees and sets out what the money can be spent on and how it is ultimately to be shared out.

Using a trust you could transfer your money and property to trustees. They can then administer them for your benefit. Other people could also set up a trust for your benefit. For example your husband or wife could leave their money and property in a will to trustees rather than outright to you.

Your solicitor can advise you on how best to protect your capital. It may be possible for your solicitor to word the trust so that the money doesn’t count as your capital for assessing welfare benefits or contributions to care home fees. However, this would not be the case if you knowingly set up the trust to avoid care charges or to keep benefits. Income from a trust, whether actually paid or not, may be taken into account. (See Deprivation of assets in chapter nine). The costs of administering a trust can sometimes be high.

Your house

As the illness progresses, you might eventually need to enter a care home. If you do not have a large income or very substantial savings, you would probably need help from the local authority to pay the fees, and might also need Income Support or Pension Credit. Financial assessment for long term care (see Long term care,) will in some cases take into account the value of your home.

You do not need to worry about the house if you live with your husband or wife, your civil partner or your opposite-sex partner. If this is the case and you enter a care home, the local authority cannot count the value of your house while he or she still lives there. The same is true if a relative who is over 60 or incapacitated, or a child under 16 you are liable to maintain, lives there. The local authority has discretion about whether to ignore the value of your house in other cases; for example when a same-sex partner or a carer still lives there.

If you transfer your home, for example to a relative, in order to try to avoid or reduce the payment of care home fees, the local authority may still take its value into account as part of your assets, when they do a financial assessment for help with fees. The Department for Work and Pensions may also take the value into account if you claim Income Support or Pension Credit. There is no time limit on this.
If you go into a care home less than six months after transferring your house, the local authority can claim back its value from whoever it was transferred to. After six months have gone by they can still take it into account and give you less help with your fees.

Take advice from a solicitor if you are thinking about transferring your home to someone else, for example to a son or daughter, while you still live there. Your right to stay in the house could be at risk. For example, the new owner might divorce or go bankrupt, or he or she could die and the rights to the house could pass on to his or her spouse. It is important that you make sure that you will be able to live in the house for as long as you need it.

Funeral arrangements

Some people wish to make provision in advance for their funeral. You can cover the cost by savings or with a pre-arranged funeral plan or a funeral bond, available from a number of funeral directors. Another way is to buy an insurance policy to cover the cost, available from insurance companies. You can usually pay for funeral plans and bonds with a lump sum or by instalments.

You can include in your will any preferences for your funeral, such as burial or cremation and any special wishes for the service. It is best if your nearest relatives know this in advance.

Other arrangements

There are other things you can do to help you manage your finances for as long as possible.

Keep your money in a bank or building society

Try not to keep large amounts of cash with you or at home. Keep money in the bank to avoid it going astray. If you don’t already have a bank or building society account you should open an account. As long as your account is kept in credit you should not have to pay any charges. Put any money you won’t need for some time in an interest-bearing account. Keep a note of the details of all your accounts, and make sure your attorney, if you have one, knows about them.

Ask organisations to pay directly into your bank or building society account to avoid cheques and other payments being mislaid. For example, your state or private pension could be paid directly into your account. You will need to sign a separate form or request (called a mandate) for each organisation. You can get the forms from the organisation concerned.

Pay bills by direct debit or standing order

You can pay regular bills automatically by direct debit or standing order. Once this is set up you will not have to worry about remembering to pay your bills. You can pay many bills this way, such as rent, mortgage, council tax, gas, electricity, telephone bills, home care services and the TV licence.

A direct debit tells the bank to pay whatever sum is due, so you don’t need to worry if the amount changes. Ask the organisation concerned for a form to fill in.
For a standing order, you sign a form authorising the bank to pay every month or week the specified amount to the organisation concerned. Once the standing order has been set up you will need to sign again if the amount changes.

Most gas, electricity and telephone companies have schemes so that the bill can be paid by regular instalments. The organisation estimates the yearly payment and fixes the monthly instalments. These can be paid by standing order or direct debit. Contact the company to do this. Some other bills, such as house insurance, can also be paid this way.

For some large bills such as winter fuel bills you can buy savings stamps. Make sure you keep these together in one safe place, and that your attorney or someone else you trust knows where they are.

Collecting pensions and benefits

The Government have introduced a new method of paying social security benefits, including pensions. The new method is called Direct Payment (this is a different scheme from the direct payments mentioned in part 8 later in this guide, which relate to Social Work services). Direct Payment is intended to replace payment by order book and giro cheque with direct payment into a bank or building society account or the new Post Office card accounts. For many people this may be a more convenient way of receiving benefits.

If you already have a bank or building society account, you can have your pension and other benefits paid directly into that account or you can set up a separate account for those payments.

A Post Office card account can only be used to receive benefits, state pensions and tax credit payments. No other payments can be paid into it. To open a Post Office card account the office which pays your benefit or pension will provide you with a Personal Invitation Document (PID) which you should take to the Post Office so they can open an account for you.

If you would have difficulties opening or managing an account, there are a number of options available, some of which provide more security than others.

Payment by cheque

You can be paid benefits by cheque instead. These cheques can be cashed at a post office or paid into an account. If you need to have your benefits or tax credits paid by cheque, you should contact the Department for Work and Pensions – see Further Help. The cheque payment option provides the facility for someone else to cash the cheque on your behalf.

Each time someone cashes a cheque for you (called third party encashment), you would need to sign the back of the cheque in the appropriate place to indicate you have asked someone else to cash it on your behalf. The person who is actually cashing the cheque will also sign a declaration on the back of the cheque. The Post Office requires the person cashing the cheque for you to produce evidence of both your identity and their own. You remain responsible for notifying the Department about all changes in your own circumstances.

You are only likely to be paid by cheque if you cannot open or manage an account. If you are being paid by cheque, and you do not receive it, or it is lost, stolen, or destroyed, you should get in touch with the office which paid it as soon as possible. You should also get in touch with the police to report the loss or theft. The Department for Work and Pensions should replace your cheque as soon as possible unless there are good reasons not to.

Account with PIN (Personal Identification Number)

If your benefits are paid into a Post Office card account, you can arrange for someone to collect your benefit for you. You can apply for one other person to be given permanent access to your account; this should be someone you trust. Ask the Post Office for a form to appoint someone to access your account. This is your Permanent Agent. The Permanent Agent will be issued with his or her own card and PIN to access your account. Your Permanent Agent is only authorised to collect payments on your behalf. You are still responsible for notifying the Department about all changes in your own circumstances. You will continue to have access to your account using your own card and PIN.

Third party mandate

A third party mandate is a formal instruction to a bank by an account owner to provide access to their account by another person. The terms of the mandate state what authority this person has. In some cases, he or she may be issued with a card and PIN, which will allow him or her to withdraw funds at cash machines.

This arrangement would only be suitable for a permanent/long-term arrangement for one named individual (e.g. relative or trusted friend). However, many banks and building societies do not provide card and PIN access to third party mandate holders.

Payment into a joint account

Another option would be to have any benefits paid into a joint account. However, it would be possible for either account holder to withdraw all the money in the account (unless both signatures were required for withdrawals). This arrangement could also have implications for the other account holder. See section on joint accounts in chapter four.

Accessing funds

If you have your pension and other benefits paid into an account, and become unable to manage your account, a carer or friend could apply to access the account on your behalf. See Authority to access the person’s funds, chapter four.

It may be possible for pension and other benefits to be paid into a designated account which an authorised withdrawer can use to pay bills and other expenses on your behalf, using a process called Intromission with Funds – see chapter four. Alternatively, someone can apply to the Department for Work and Pensions to be made an appointee, to handle your benefits – see chapter four.

Someone to handle your benefits

If you have difficulty managing your benefits, a friend or relative can apply to the Department for Work and Pensions to be made an appointee. He or she will then handle your benefits and keep the Department for Work and Pensions informed of any changes in your circumstances. See Payment of pensions and benefits in chapter four.

Power of attorney

If someone has continuing power of attorney for you, he or she can usually collect your benefits and manage Post Office, bank or building society accounts for you. See Using a continuing power of attorney.

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Summary

Making plans as early as possible is very important.

Later on in the illness you may no longer be able to make these arrangements.

You can make a continuing power of attorney to appoint someone to look after your financial affairs if you no longer can.

You can make a welfare power of attorney to appoint someone to look after your personal and welfare decisions if you no longer can.

Your attorney must always follow the principles of the Adults with Incapacity Act.

A solicitor can help you set up a power of attorney although you can do it yourself.

Powers of attorney must be registered with the Public Guardian before they can be used.

Powers of attorney written after January 1991 and before 2001 will still work.

If you do not have a will, make one while you are able.

You can write down your wishes about future treatment in an advance statement or ‘living will’.

If you want to put your money in a trust, consult a solicitor.

In some circumstances, the value of your house will not count if you are assessed for care home fees.

Take advice if you are considering giving away your house or other property.

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