My husband has Alzheimer's

Christine, 69, is worried about her husband and their future finances. She writes:

'My husband is 71 and has 'atypical' Alzheimer's disease. He is in the care of the local consultant. He is physically fit and behaves normally but finds it difficult to understand what is said to him. He also finds it difficult to express himself, as the communication area of the brain is affected. Apart from late-onset diabetes I am well and active.

'At present our income is above our expenditure. My husband receives an occupational pension which, together with his state pension and a couple of small annuities, adds up to about £21,000 a year, while my income including a small NHS pension is £7,650 a year.

'We have two sons. Our younger son and his family live in South Africa. We used to spend quite a lot on visiting them but we can no longer do that due to my husband's health. So that is one less expense. Our elder son lives with us.

'On our solicitor's advice we became tenants in common of our home, which is worth about £300,000, and I was told our son has 'right of residence'. I was also advised to divide up our investments into two separate names. We have made a will in which if I die first my husband receives everything, since he will need the money to pay for care. If he dies first, half of our money will go to our sons.

'My problems are:

· If/when my husband has to go into a nursing home are there any long-term nursing insurance schemes available so that our money and therefore our sons' inheritance is not drained away?

· Can we do anything better with our savings in the meantime? We have about £96,000 in a variety of building society accounts and cash Isas but interest rates are pathetic.

Our IFA is not willing to give us further advice as he says his charges would wipe out any profit we might make as a result of his advice!'

Think about an immediate-care plan


Your first step, says Peter Fisher of specialist independent financial adviser Nursing Home Fees Agency, should be to draw up an enduring power of attorney for your husband so that when he is unable to make decisions for himself, his finances can be managed through his nominated representatives. You may wish to do the same for yourself.

In view of the care and supervision needed by your husband, Fisher says he may already be eligible for a non-means-tested state benefit called attendance allowance. Contact your local Department of Work and Pensions (DWP) for a claim pack. There is also the possibility the NHS may be responsible for his care at home. Chris Ellicott, long-term care specialist at Age Concern Financial Partnerships, advises: 'If no assessment has been carried out to establish if care is an NHS responsibility, Christine should ask for this to be done'.

There are pre-funded insurance schemes to cover future long-term care costs but Ellicott says that in view of your husband's condition it is unlikely you will be able to arrange one.

Owning your home as 'tenants in common' is a sensible arrangement. It can mean that if your husband needs to go into a care home, the entire value of the home escapes the means test, but only if both your wills are set up correctly, says Ellicott. He explains: 'Both of you need to leave your interest to someone else, not to each other; that way neither of you ever owns the home entirely and the value of a part interest is nil [according to rules on charging for residential accommodation that local authorities work from].

'You therefore need to alter your will so that your husband does not inherit your interest in the home, though you do need to make sure that if you die first he still has the right to live there. As well as your interest in the house you could also leave your other investments to your sons, if you wish to protect them from the means test.'

If you both needed residential care simultaneously then your house does count and half the value would be counted in each means test; tenancy in common is no protection in this situation. If this does happen, then one or both of you might want to consider purchasing an immediate-care plan.

These are a type of annuity that can provide a guaranteed regular tax-free payment towards your hus band's care fees for the rest of his life. The cost is determined by a combination of the income needed, his age and his health. In simple terms, the worse his condition, the more favourable the terms, as life expectancy is usually shorter.

Fisher says: 'There are currently four insurers offering these plans. Make sure you arrange to obtain firm offers from all companies as prices can differ widely. The downside to these plans is that for the basic no-frills option when your husband dies there will be no return of capital to his estate. Partial capital protection can be added, but this could significantly increase the cost.'

The immediate-care plan would not need to cover the whole of the cost of care. A contribution towards the nursing costs will be provided by the government and your husband's pension could also be used. Nicky Cave, head of the Millfield Care Partnership, says: 'We would have to establish how much of your joint annual income would be needed for your own living expenses and how much could be put towards your husband's care fees. The resulting 'shortfall' between care fees and available income can be provided by the immediate care annuity.'

Cave believes it is possible that your joint savings would be sufficient to cover the cost of the annuity, leaving the property (and your sons' inheritance) ringfenced should you die before your husband. If and when this type of annuity is required do make sure you seek the advice of a specialist independent financial adviser so you get the best deal.

In the meantime, don't be too ambitious with your savings, Cave says. 'The sorts of investments that could achieve better returns than you are getting currently will need to run for at least a three- to five-year term.' They may also involve the risk of losing money. As you do not know when your husband will need care it is better to keep your money safe and accessible in bank and building society accounts. But shop around regularly to make sure you are getting the best interest rates.

Christine's to do list

1. Establish an enduring power of attorney for your husband and yourself.


2. Ask the NHS to assess your husband's care needs.


3. Consider altering your will so your husband does not inherit your interest in the home, and leave your other investments to your sons too if you wish to protect these from the means test.


4. If you or your husband do need to contribute to the cost of care, consider an immediate-care plan.


5. Deal with an adviser who specialises in long-term care.


6. Unless you are confident your husband will not need care for at least five years, leave your savings in bank and building society accounts.


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