Thanks to better diets and access to healthcare, more people are living longer. Earlier this year, John Tinniswood from Merseyside became the world’s oldest living person. The 112-year-old puts this achievement down to his regular fish and chips on a Friday and having hiked regularly when he was younger.
The Office for National Statistics (ONS) reports that over the next 15 years, the size of the UK population aged 85 years and over is projected to increase from 1.6 million to 2.6 million.
Supporting older members of your family can help them remain independent as they age, particularly when it comes to money matters. This is especially true when you consider that the Alzheimer’s Society expects the number of people living with dementia in the UK to rise to 1.4 million in 2040.
So, if you have elderly relatives, here are five useful ways that you can support them when it comes to managing their finances.
1. Help them with their banking
The Guardian reports that, since 2015, more than 6,000 UK bank branches have closed. Many of these are in smaller towns and villages.
If you have an older relative who may struggle with travel due to anxiety or mobility issues, or they simply prefer to do their banking face to face, then the closure of their local branch could present a real challenge.
Providing support with switching their account – perhaps to a provider who does retain a local branch – or helping them with online banking can enable them to feel more confident if they are no longer able to bank in person.
The Current Account Switch Guarantee is designed to make switching easy. The new bank will switch your relative’s payments (such as direct debits) and transfer their balance, while their old bank will close their old account. The guarantee means this takes just a few days.
You could either accompany your relative to the branch and help them complete the forms, or you could help them get online and switch from home.
2. Set up a Lasting Power of Attorney
Another way that you can help an older relative manage their finances is through a Lasting Power of Attorney (LPA). In Scotland, you can achieve the same goals with a Combined Power of Attorney, while in Northern Ireland it’s known as an Enduring Power of Attorney.
An LPA is a legal document that allows your relative to appoint an individual or individuals (known as “attorneys”) to make decisions on their behalf.
Under a financial LPA, the attorney can maintain a bank account, access savings, claim benefits, and deal with property matters. The LPA also lets the individual delegate the management of their finances to their chosen attorney, even if they retain mental capacity.
If you put a financial LPA in place, your older relative will have peace of mind knowing that there will be a trusted person available to make decisions about their money with their best interests at heart. They can then either choose to continue managing their finances or delegate certain decisions to their attorney.
However, once an individual loses mental capacity, they can no longer arrange an LPA, so it’s something to consider sooner rather than later.
You can register a Power of Attorney directly with the Office of the Public Guardian (OPG). However, making mistakes can be costly, so seeking advice from a qualified legal expert can ensure your Power of Attorney is completely watertight.
Supporting older members of your family can help them remain independent as they age.
3. Encourage them to talk about their wishes
It’s important to raise the issue of estate planning with your parents and relatives. They may have strong views about how they would like to manage their finances while they are alive and what they would like to happen to their wealth when they pass away.
A good way to help an older relative manage their money is to encourage them to talk about their wishes. With will and estate disputes on the rise, open conversations about what they want can help to manage expectations and avoid stressful and costly arguments once they pass.
If they don’t already have a will or haven’t updated their will for some time, this can be a good place to begin. Without a will, their estate will be distributed according to the laws of intestacy. This can delay the distribution of wealth and could also mean that their assets don’t go to their chosen beneficiaries.
Your relative may also face a potential Inheritance Tax (IHT) issue if the value of their estate is above certain thresholds. Failure to discuss and proactively tackle any IHT concerns could leave their beneficiaries – potentially you! – facing a significant tax charge on their passing.
A legal expert can help your loved one draft a will that reflects their wishes, while an Amber River financial planner can help with the tax-efficient transfer of assets if there are IHT concerns.
Remember that the Financial Conduct Authority does not regulate estate planning, Lasting Powers of Attorney, or will writing.
4. Create a Life Directory
Over time, your relatives are likely to have accumulated many savings accounts, investments, pensions, shares, and insurance policies.
Administering their estate once they pass can be tricky, so creating a Life Directory while they are alive can make things much more straightforward when the time comes.
A Life Directory document can be a helpful way of keeping lots of important information in one place and will smooth the transition of an older relative’s finances. It might include details of the following:
- Insurance policies
- Details of any bank, savings, pensions, and investments
- Location of key documents, including a passport, birth certificate, will, and property deeds
- Contact details for an individual’s doctor, accountant, financial planner, solicitor, and other professionals
- Any funeral plans
- Details about utilities, subscriptions, and other accounts that may need to be transferred.
It is never too early to get all your important information together in one place. Your Amber River financial planner can help you and your relative create a Life Directory document.
5. Plan for later-life care costs
As your relatives age, they may need to access some form of later-life care. This may be to help them with their daily tasks or provide specialist help for certain health conditions.
According to Age UK, it costs around £800 a week (on average) for a place in a care home and £1,078 a week for a place in a nursing home. Consequently, the cost of care can mount up quickly.
Exploring how your relatives may fund later-life care costs can help you put a plan in place. Discussing their wishes with them, as mentioned above, can also help you understand what sort of care they will be comfortable with, and how you might pay for this care.
Get in touch
To discover how an Amber River financial planner could help you and your relatives create a watertight financial and estate plan, call 0800 915 0000, or alternatively use our contact form here.
Disclaimer:
The information within this article was correct at the time of publishing, but laws and tax rules are subject to change. Your circumstances and where you live in the UK also have an impact on tax treatment.
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