As your parents and grandparents get older, it’s likely that they will need more support from you and other members of your family.
But, when it comes to their finances, a new study has found that middle-aged people are “overwhelmed” and underprepared for having to help their elderly relatives deal with money.
A survey reported by This is Money found that almost half of 35- to 59-year-olds feel worried about having to manage their parents’ money in the future. Among those who expressed concern, 52% admitted feeling “overwhelmed” at the prospect, while 50% were afraid of doing something wrong.
If your parents or grandparents need help or are likely to need your support in the future, here are four practical ways you can help.
1. Provide practical support
One of the barriers that many older people face is the difficulty of managing their money in the 21st century.
The government reports that, between 2012 and 2022, the total number of bank and building society branches in the UK fell by 40%. Consequently, many people are finding it harder to visit their bank for help with managing their accounts.
If you then consider that 2 in 5 over-75s don’t use the internet at all (according to Age UK) you can see how online and digital banking could lock out millions of older people.
This may be an area where you can provide practical support to your loved ones. Helping them to navigate online or telephone banking can empower them to keep control of their own finances. Some financial providers even offer free online courses to help less tech-savvy individuals to access their services.
Alternatively, you might be able to help your parents or grandparents to switch their account to a provider who does have a local branch they can visit for assistance.
2. Use a Lasting Power of Attorney
A Lasting Power of Attorney (LPA) is a legal document that allows your older relatives to appoint an individual or individuals (known as “attorneys”) to make decisions on their behalf should they lose mental capacity.
When it comes to financial matters, the LPA also lets individuals delegate the management of their finances to their chosen attorney(s), even if they retain mental capacity. So, for example, if a parent nominated you as an attorney, you could manage their bank account on their behalf.
There are two main types of LPA.
Financial
This allows the attorney to manage various aspects of your relative’s wealth, including their bank accounts, bills, benefits or pensions, and property.
Health and wellbeing
This allows the attorney to make decisions that affect an individual’s health and well-being when they cannot. As an attorney you can make decisions about a loved one’s daily routine and medical care, where they should live, and whether to proceed with life-sustaining treatment.
Putting an LPA in place gives a parent or grandparent the reassurance that someone with their best interests at heart can make decisions about their money, and health and well-being.
Remember that if a person loses mental capacity, it’s then too late to put an LPA in place. So, taking this step sooner rather than later can provide real peace of mind.
3. Encourage them to make a will
Research from Canada Life has revealed that half of UK adults don’t have a will. Perhaps more worryingly, 1 in 3 over-55s say they don’t have this document in place.
A will ensures your parent or grandparent can distribute their assets according to their wishes. Without one, the rules of intestacy mean that their wealth might not end up with their chosen beneficiaries.
Helping an elderly relative to write a will – or rewrite an existing will if it is outdated – gives them the peace of mind that their finances will pass in accordance with their wishes when they die.
It can also help you to avoid the stress of having to deal with administering your loved one’s estate when they pass.
4. Encourage them to seek professional advice
A final way that you can support your elderly relatives with their finances is to encourage them to seek financial advice.
We work with many client families where we advise multiple generations – sometimes grandparents, parents, and children.
Taking a joined-up approach to your intergenerational planning can help to ensure the tax-efficient transfer of wealth and ensure everyone is on the same page when it comes to the family finances.
“Black Swan Financial Planning was established in 2000, and since then became one of the top independent financial adviser firms in the UK.”
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