How to plan your finances following a dementia diagnosis

In this collaboration with our partners at Podplan, the digital platform that helps families make informed decisions and plan ahead, we explain how care funding in England works, who may pay, and what families may need to consider next.

Currently, around 982,000 people in the UK are living with dementia. 

Receiving a dementia diagnosis can be worrying, both for the person affected and their loved ones. It can also raise many questions about future care, financial arrangements and how best to prepare for the years ahead. 

Importantly, a dementia diagnosis does not automatically mean someone has lost the ability to make decisions. Many people continue to make their own financial, legal and personal decisions following diagnosis, although everyone’s experience is different. Taking steps early can help ensure your finances are organised, your wishes are understood and the people closest to you know how to support you if your needs change. 

Below, we’ve shared a checklist of financial arrangements to prioritise following a diagnosis, steps to consider over the following weeks and longer-term decisions worth thinking about. 

What to prioritise following a diagnosis: 

1. Make or register both Lasting Powers of Attorney 

We’ve explained Lasting Powers of Attorney (LPAs) in more detail  in this article, but it’s worth checking whether you already have both types in place. 

A Property and Financial Affairs LPA allows someone you trust to help manage your finances, including bills, pensions, bank accounts and property. A Health and Welfare LPA allows your chosen attorney to make decisions about your care, medical treatment and living arrangements if you become unable to make those decisions yourself. One LPA does not cover the other, so it’s important to consider both. 

You must have the mental capacity to make an LPA when you sign it, and it must be registered before it can be used. A Property and Financial Affairs LPA can be used while you still have capacity, with your permission, whereas a Health and Welfare LPA can only be used when you lack capacity for the particular decision. 

If you haven’t already arranged your LPAs, it’s sensible to make this a priority. 

2. Review and update your Will

A dementia diagnosis does not automatically prevent you from making or changing your Will. However, you must have the necessary mental capacity to do so. This is known as testamentary capacity. Reviewing your Will early gives you an opportunity to check that it still reflects your wishes and that the people you want to benefit are properly provided for. If you later lose testamentary capacity, you won’t be able to make changes yourself.  

3. Review all your pension nominations 

Pension nominations, often called Expressions of Wish, tell your pension provider who you would like to receive your pension benefits when you die. These are generally separate from your Will, so it’s important to check that they are up to date and reflect your wishes. 

You should also be aware that from 6 April 2027, most unused pension funds and pension death benefits will be included in estates for Inheritance Tax purposes. We’ve explained more about these changes and how you can prepare here. 

4. Record your wishes and preferences 

Think about where you would like to live, how you would prefer to be cared for if your needs change, and who you would want involved in important decisions. Writing these wishes down and discussing them with your family and attorneys can help them understand what matters most to you.  

What to do in the first few weeks following a diagnosis:

1. Make a list of all your accounts, pensions and policies 

Having a clear record of your financial arrangements can make life much easier for you and anyone who may need to help manage your affairs in the future. This might include bank accounts, pensions, insurance policies, investments, property details and important professional contacts. Banks and other financial providers will generally need appropriate legal authority before allowing someone else to manage your accounts. A registered Property and Financial Affairs LPA is one way to provide this authority. 

Podplan, for example, offers PodVault, a secure online space where you can keep important information together and share access with trusted family members. 

This can include details of your Will, solicitor, insurance providers, pension schemes and other information your family may need. Keeping everything organised in one place can make a real difference if someone needs to step in and help. 

2. Review your overall IHT position 

For the 2026/27 tax year, the standard Inheritance Tax threshold is £325,000. An additional allowance of up to £175,000 may be available when a qualifying home is passed to direct descendants, such as children or grandchildren. The amount available will depend on your circumstances, including the value of your estate, who inherits and whether any unused allowances can be transferred from a spouse or civil partner. If some of your wealth is used to pay for care, this may reduce the value of your estate and potentially your Inheritance Tax liability. 

However, estate planning can be complicated, particularly where property, pensions and family arrangements are involved. It’s important to seek professional advice before making significant financial decisions. 

3. Understand your potential exposure to care costs 

The cost of care can vary considerably depending on the type of support required, where you live and whether care is provided at home or in a residential or nursing home. Specialist dementia care can be particularly expensive, especially where nursing support is needed. 

It may be helpful to use a cash flow model to explore how potential care costs could affect your finances over two, four or six years. This can help you understand how care fees might be funded, how long your savings and investments could last and what wealth may remain available for other needs or beneficiaries. It’s also important to understand that not everyone has to pay the full cost of their care. Depending on their needs and circumstances, some people may qualify for NHS or local authority support. We’ve explained more about care funding in England in this article. 

4. Understand when to request an NHS Continuing Healthcare (CHC) checklist assessment 

NHS Continuing Healthcare (CHC) is funding provided by the NHS for adults who are assessed as having a primary health need. If eligible, the NHS can cover the full cost of the assessed care package, including care home accommodation where required. Importantly, eligibility is based on care needs rather than income, savings or property. 

A dementia diagnosis alone does not qualify someone for CHC. However, where someone’s needs become complex, intense or unpredictable, it may be appropriate to consider an assessment. The process will usually begin with a CHC Checklist to determine whether a full assessment is needed. If you believe CHC may be relevant, ask the health or social care professionals involved whether an assessment should be considered. You don’t need to wait until someone moves into a nursing home or begins paying privately for care. More information about the service can be found here. 

Longer-term decisions to consider 

1. Consider your property position and joint ownership structure 

How you own your property can affect what happens to it when you die, as well as your wider estate planning. If you own your home as joint tenants, your interest in the property will normally pass automatically to the surviving joint owner when you die, rather than through your Will. If you own it as tenants in common, each owner’s share can be passed on through their Will. 

These arrangements can have important implications for inheritance, care funding and the financial security of a surviving partner. Changing how a property is owned can also have legal and tax consequences, so it’s important to seek professional advice before making any changes. 

2. Review your life insurance and protection policies 

If you have any life insurance or protection policies, check whether they still meet your needs and whether the premiums are being paid. It’s also worth reviewing who would receive any benefits and whether the arrangements remain consistent with your wider estate planning. 

A dementia diagnosis may affect your ability to obtain new cover or change existing policies, so seek advice before cancelling or making changes to any protection you already have. 

3. Make sure your family know where to find everything

While you’re able to do so, take some time to sit down with your family or the people you trust and explain where they can find important information. This might include financial documents, details of your Will and LPAs, insurance policies, pension information and contact details for your solicitor, financial planner or other professionals. You may also want to explain any particular wishes or preferences that are important to you. Having these conversations early can help avoid confusion and make things easier for everyone if your circumstances change. 

You don’t have to plan your finances alone 

Arranging your finances after a dementia diagnosis can be a daunting prospect on top of everything else you’ll need to plan for. With a qualified financial planner by your side, however, you’ll have more freedom to focus on your health and wellbeing while they take care of the rest.  

At Attivo, we’re proud to have several SOLLA-accredited financial planners on our team, all of whom have a wealth of experience supporting clients with later life financial planning.  

If this is something you’d like to find out more about, you can arrange a free, no-obligation consultation with a member of our team today. We’d also be very happy for a trusted friend or family member to accompany you.