22 March 2017

Case Study: John and Mary

Article by Miranda Marshall, Director, Hayes + Storr and Jane Arnup, Elderly Client Services. Both fully accredited members of Solicitors for the Elderly.

John and Mary are in their late 80s. John has a good occupational pension but Mary has none. They have Wills leaving everything to each other and then to their son Sam. John has suffered poor physical health and Mary is becoming ‘very forgetful’. They have supported each other and have carried on living in their home. As Mary has no pension, other than State pension, they put all their savings in her name to lessen income tax. They own their bungalow.

John suffers a fall and is admitted to hospital and, as Mary cannot cope alone, she goes into temporary residential care. When John returns home from hospital, it is too much for him to manage to look after Mary too, so she stays in the care home. The Local Authority visit John to assess Mary’s contribution to her care costs. The house is ignored, as John is living there. Mary’s state pension and the joint bank account are taken into account but the main problem is that the savings in Mary’s sole name of £80,000 are added in too, so that Mary has to pay the full cost of care.

John is advised to see a solicitor. Her advice is as follows:

John claims for Attendance Allowance from the DWP. This is non-means-tested and non-taxable.

John transfers half the money from their joint account into in a new account in his sole name. He gets all his income paid into this account.

As Mary had not made a Power of Attorney, an application to the Court of Protection is made for the appointment of a Deputy for Mary, to deal with her property and financial affairs.

Attendance Allowance is also claimed for Mary and the solicitor becomes appointee for Mary’s state pension and other benefits, until the application for Mary’s Deputy is in place.

John severs the ‘joint tenancy’ of their bungalow so his half does not automatically pass to Mary, if he dies.

John makes a new Will giving everything to their son Sam, so that John’s money and assets do not pass to Mary, to be used on care fees, in the event that John dies before Mary.

Once the Deputy appointment is through, the Deputy applies to the Court of Protection for the transfer of half of the investments back to him (£40,000).

Sadly, John dies. £40,000 of savings are paid into John’s estate. The house is sold and John’s half and everything else in John’s estate passes to Sam, under John’s Will. If John hadn’t changed his Will, his whole estate would have passed to Mary and might all have been swallowed up in Mary’s care costs.

Mary has enough to pay for her care her from her half of the house sale proceeds so she is reasonably provided for according to the law.

The moral of the story, is that John took advice just in time, particularly as to changing his Will. It would have been even better if John and Mary had both made a Lasting Power of Attorney, as this costs much less than an application to the Court of Protection, for the appointment of a Deputy. Happily, most of the family wealth was preserved for the next generation.

This article aims to supply general information, but it is not intended to constitute advice. Any similarity to people living or dead is unintended and purely coincidental. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek our specific advice.

If you would like further advice on this matter please contact Jane Arnup on 01263 712835 or email jane.arnup@hayes-storr.com. If you require advice on any other legal matter call 01328 863231 or email law@hayes-storr.com.