Dementia and debt

Dementia affects your memory and thinking skills. There are several types of dementia, with Alzheimer's disease being the most well-known and the most common. But it's not just about forgetting names or where you left your keys; dementia can result in a wide range of issues for the sufferer – including money problems and debt.

This guide will look at how dementia can affect the finances of not just the individual facing the condition, but also their caregivers. Plus, we'll share details of the support that’s available.

What’s the link between debt and dementia?

For someone living with dementia, managing finances can be difficult.

In its early stages, a sufferer might be able to carry out day-to-day tasks, such as buying food shopping, but they may find it harder to do things like balance their bank account or change energy supplier.

As the condition progresses, cognitive decline can make managing finances feel like an impossible task.

The ability to remember bills, understand bank statements, or even recognise the value of money can disappear. This can lead to missed payments, late fees and even financial exploitation by unscrupulous people.

People with dementia are at a higher risk of falling victim to scams. Friends and family often report feeling helpless when they see their loved ones making questionable financial decisions.

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Financial support for people with dementia

There are several forms of financial support available for individuals living with dementia and their unpaid carers:

Disability benefits

People with dementia may be eligible for disability benefits. The main ones are:

personal independence payment (PIP) – this is designed to help with extra costs if you have a long-term health condition or disability. It’s available to those aged 16 to 64 and is not means tested.
attendance allowance – this is for older adults (aged 65 and over) who need help with personal care. It's tax free and can be used to pay for care services or support.

If a dementia sufferer is unable to apply for benefits themselves due to the severity of their condition, a friend, relative or social worker can apply to act on their behalf. More information about becoming an appointee is available on the government website.

Carer’s allowance

If you’re looking after someone with dementia for at least 35 hours a week and they receive certain disability benefits, you may be eligible for carer’s allowance. This benefit is designed to help with the costs of being a carer and is currently £81.90 per week (as of April 2024).

Local authority support

Your local council may provide additional support, including financial assistance for care home placements or home adaptations that can make caring for someone with dementia easier. It’s worth contacting your local authority to see what support is available in your area.

Medical write off

If someone with dementia is struggling with debt, creditors may be prepared in certain circumstances to write some or all of that debt off. Find more information on medical write off.

Taking responsibility for the finances of someone with dementia

It can be difficult to judge when it’s time to take responsibility for the finances of a loved one suffering from dementia and if you’re the right person to do it.

The Alzheimer’s Society suggests asking yourself these questions when thinking about taking over someone’s finances:

What decisions is the person with dementia struggling with?
Can you support someone to manage their own finances, for example by providing clear and easy-to-understand information?
Is there support on offer to help someone with their finances, e.g. chip and signature card, large-print documents, direct debits for bills?
Are there aspects of their finances that the person is managing well, such as day-to-day affairs like doing the shopping?
Are there any bills that have not been paid? Have any bills or services been overpaid, or any money unaccounted for?

Third-party authorities

Third-party authorities (TPA) can speak and act on someone’s behalf – with their permission. While this can be helpful, TPA don’t have any legal powers, for example, you wouldn’t be able to agree to enter them into a debt solution – only someone with power of attorney would be able to do this.

Power of attorney

One of the most effective ways to speak on behalf of someone with dementia is through a legal arrangement known as power of attorney (PoA).

There are three different types of PoA – lasting power of attorney (LPA), enduring power of attorney (EPA) and ordinary power of attorney (OPA).

All three can be used to make financial decisions but when and where they can be used differ.

Ordinary power of attorney

These are only valid for making financial decisions while someone still has mental capacity. They can be used if someone is unable to look after their finances temporarily e.g. because they’re in hospital, or if it’d be easier for someone else to act e.g. it’s hard for someone to get to the bank or Post Office.

Enduring power of attorney

These are only for financial decisions. You can’t make a new one now (you have to make a lasting power of attorney (LPA) instead) but any existing ones in place before 1 October 2007 are still valid.

Lasting power of attorney

There are two types of LPA:

property and financial affairs LPA – this allows the appointed person to make decisions regarding someone’s financial matters, including debts

health and welfare LPA – this type is more about healthcare decisions

How to set up a power of attorney

A lasting power of attorney can be set up before you actually need it in case you ever lose the mental capacity to make your own decisions.

The LPA forms and an information pack are available from the Office of the Public Guardian.

What if no power of attorney is set up?

If someone with dementia has not set up a power of attorney and is assessed as lacking capacity, family members or caregivers may need to consider applying to the court of protection for a deputyship.

This legal process can be time-consuming and may require legal advice, but it can allow the court to manage a person’s financial affairs, including dealing with debt.

Where to find help

Whether you’re a caregiver or someone living with dementia, having the right support can make a world of difference.

If you need free debt advice, get in touch whether it’s for you or a loved one with dementia.

Our advisers go through the Alzheimer’s Society’s Dementia Friends training so they’re well equipped to provide additional support to vulnerable people who need help with debt, including anyone living with dementia or Alzheimer’s.

We can provide guidance on budgeting and negotiating with creditors, and can help you explore options like debt management plans or formal debt solutions. Some solutions are free and for some there are fees.

Dementia Connect, the Alzheimer’s Society’s free support service, offers personalised help and advice to anyone needing extra assistance. You can access one-on-one support, find local services or simply talk to someone who understands what you’re going through.

Dementia UK has a free helpline run by dementia nurses who can answer your questions and provide specialist support.

And if you need more hands-on assistance, Age UK carries out home visits and assessments to see what help you need.