One of the most distressing situations a family can face is realising that a loved one needs to move into a care home, only to discover that no one has the legal authority to access their money to pay the fees.
At AFG Law, our Private Client team regularly speaks to families in exactly this position. A parent has developed dementia or suffered a stroke, they have lost mental capacity, the care home fees are due, but their bank refuses to allow anyone access to their accounts.
It can feel frustrating and overwhelming, particularly when everyone is simply trying to do the right thing. The good news is that there are legal solutions, but they can take time. This is why planning ahead is so important.
Case Study: “We Need to Pay Mum’s Care Home Fees, But We Can’t Access Her Bank Account”
We were recently contacted by a family whose mother had been diagnosed with dementia and had reached the point where she could no longer live safely at home. Following discussions with her medical team, she moved into a care home so she could receive the support she needed.
The family naturally turned their attention to making sure her finances were in order and that her care home fees could be paid. However, they quickly discovered a significant problem.
Although their mother had always managed her own finances, she had never made a Lasting Power of Attorney. When her daughter contacted her bank, she was told that, despite being her next of kin, the bank could not allow her to access the account or make financial decisions on her mother’s behalf.
The family were understandably frustrated. They weren’t trying to access the money for themselves. They simply wanted to pay the care home fees and ensure their mother’s bills continued to be paid on time. Unfortunately, without the necessary legal authority, the bank was unable to help.
We advised the family on the deputyship process and assisted them with an application to the Court of Protection so that someone could be formally appointed to manage their mother’s financial affairs. Although the process took time, it ultimately provided the legal authority needed to deal with her finances properly and gave the family reassurance that everything was being managed in accordance with the law.
Sadly, this is a situation we encounter more often than many people realise. It also highlights why putting a Lasting Power of Attorney in place while someone still has mental capacity can make an enormous difference, avoiding delays, uncertainty and additional stress at what is already a difficult time for the whole family.
Why Can’t the Bank Let Me Access the Account?
Many people assume that close family members can simply step in when someone loses capacity. Unfortunately, this is not the case.
Banks and building societies have legal obligations to protect their customers’ money. Unless there is a valid Power of Attorney, a Court of Protection order or another recognised legal authority, they cannot simply allow someone else to manage the account holder’s finances.
While this can feel incredibly frustrating, these safeguards exist to protect vulnerable people from financial abuse.
Does Dementia Automatically Mean Someone Has Lost Mental Capacity?
No, a diagnosis of dementia does not automatically mean someone lacks mental capacity.
Many people continue making their own financial decisions for months or even years after diagnosis. Capacity is decision-specific. Someone may be able to decide how to spend their weekly shopping budget but struggle to understand more complex financial matters.
The important point is that a Lasting Power of Attorney can only be made while someone still has the mental capacity to understand what they are signing.
What If There is Already a Power of Attorney?
If your parent has already registered a Property and Financial Affairs Lasting Power of Attorney, life is usually much simpler. The appointed attorney can generally deal with matters such as:
- Paying care home fees
- Managing bank accounts
- Paying utility bills
- Dealing with council tax
- Managing pensions and investments
- Speaking with the Department for Work and Pensions (DWP)
- Selling property where appropriate
Having a Power of Attorney in place allows someone your parent has chosen and trusts to make financial decisions on their behalf if they are no longer able to do so.
What Happens If There Isn’t a Power of Attorney?
If your parent has already lost capacity and there is no Lasting Power of Attorney, the situation becomes more complicated. In most cases, someone will need to apply to the Court of Protection to become a deputy.
Only once appointed by the court can that person begin managing someone else’s financial affairs. Unfortunately, deputyship applications can take quite a long time to process.
During that time, families often worry about how ongoing expenses, including care home fees, will be paid.
Can the Bank Make an Exception?
People often ask whether the bank can simply release money to pay the care home. In most cases, the answer is no.
The bank or building society must comply with its own legal obligations and terms and conditions. Without appropriate legal authority, staff cannot simply hand over access to an account, regardless of how genuine the circumstances may be.
There may be limited exceptions for certain practical matters depending on the institution’s policies, but families should not rely on this.
What About Joint Bank Accounts?
If your parent has a joint bank account, the position may be different. Depending on how the account operates, the other account holder may continue to access the account. In some situations, that banks may freeze joint accounts if they discover one person has lost mental capacity.
However, a joint account does not automatically give authority to deal with all of someone’s wider financial affairs.
For example, it may not allow someone to:
- Sell property
- Manage investments
- Deal with pensions
- Access other accounts held solely in your parent’s name
Each situation should be considered individually.
Who Pays the Bills While Waiting?
Families are often concerned about practical matters while a deputyship application is progressing.
These may include:
- Care home fees
- Mortgage payments
- Utility bills
- Council tax
- Insurance
- Household expenses
Depending on the circumstances, there may be temporary arrangements available, but these vary considerably. Obtaining legal advice early can help identify the most appropriate solution for your family’s circumstances.
What About Benefits?
If your parent receives benefits, you may also need authority to deal with the Department for Work and Pensions (DWP). The Department for Work and Pensions has separate procedures that may allow someone to help manage benefit payments in certain situations.
However, becoming a DWP appointee does not replace a Lasting Power of Attorney or deputyship and does not provide authority over wider financial matters.
Will You Need to Sell the Person’s House?
Sometimes the only way to fund long-term care is to sell the family home. There are important exceptions. If a spouse, civil partner or certain other qualifying relatives continue to live in the property, its value will usually be disregarded when the local authority assesses your parent’s ability to contribute towards their care fees. This means the family home will not normally have to be sold while that person remains living there.
If your parent needs to sell their home to pay for care fees, but lacks capacity and no Lasting Power of Attorney exists, authority from the Court of Protection may be required before the property can be sold.
This can understandably delay matters, which is another reason why putting a Power of Attorney in place before capacity is lost can be so valuable.
Planning Ahead Makes a Huge Difference
Many families only discover how important a Lasting Power of Attorney is when it is already too late.
Planning ahead does not mean expecting the worst. It simply means ensuring that, should circumstances change, someone you trust is able to step in quickly and manage your affairs.
Alongside a Will, reviewing your estate planning and considering matters such as Inheritance Tax, a Lasting Power of Attorney is one of the most important legal documents many people will ever make.
How AFG Law Can Help
When a loved one loses capacity, families are often dealing with difficult emotions as well as urgent practical decisions. Our role is to help make the legal process as straightforward as possible.
At AFG Law, our experienced Private Client team can advise on:
- Lasting Powers of Attorney.
- Deputyship applications to the Court of Protection.
- Property and financial affairs.
- Paying care home fees.
- Estate planning.
- Wills and Inheritance Tax planning.
If you’re worried about how care fees will be paid because there is no Power of Attorney in place, we’re here to help. We can explain your options, guide you through the deputyship process where necessary and help ensure your loved one’s finances are managed lawfully and in their best interests.