Elderly Parents and Finances
A report from HMRC showed that a shocking 79% of people haven’t discussed their medical care, or later life plans, with loved ones. This can cause serious financial issues in the future, which can be difficult to deal with as people get older. If you suspect your parents are struggling with their finances, acting now to support them will give all of you peace of mind.
One of the most challenging parts of this process is identifying that your parents need your help. They might want to avoid talking about money issues. Breaking down that wall, then discussing how they’re coping and what to do next is a great first step.
Call or email us to get expert advice for you and your parents’ finances.
Prepare for unexpected costs
Once you’re certain they’re in need of help, it’s important to understand future problems they may encounter. These can include unexpected expenses that come with getting older. For example, an increase in car insurance can add to later life costs. On average, it starts to increase from the age of 70.
Protect your parents against scams
The threats of fraud and scams are rarely considered when dealing with other people’s finances. But, this is a huge, modern-day problem. Half of all over-65s have been targeted by fraudsters, and they are three times more likely to lose money this way than to burglary.
And, online scams are even more serious. 65 to 74-year-olds are 54 times more likely to fall victim to computer scams than be physically robbed. People will often deny they have been scammed as they are too embarrassed to ask for help. In extreme cases, some older people have lost tens of thousands of pounds, with payments only stopping when a Lasting Power of Attorney was granted to family members.
Educating your parents about scams can prevent them from becoming victims. Things to watch out for include out-of-the-blue contact and being pressured to act quickly. You can advise them to reject unexpected offers, avoid giving out personal information or seek further assistance from organisations like Action Fraud.
If your parents don’t have savings
Your parents’ savings might not be enough for them to maintain a healthy lifestyle or pay for care. Perhaps they spent their savings on an extravagant lifestyle in later life. Or, maybe they couldn’t save money due to their income. Whatever the case, implementing a regular budget now is essential.
You can ensure your role in their financial management by setting up a third-party mandate on their bank accounts. This means that your parents give their bank permission to accept your instructions for day-to-day banking. You will be able to set up Direct Debits and pay bills on their behalf. If you’re looking for more control over their finances, then a joint account is a sensible option. However, if the account accrues any debts, then both you and your parents will be liable.
If your parents are homeowners, they could release money tied up in their home as tax-free cash. Equity Release plans usually release around 35% of a home’s value, while allowing the owner to continue living in the property.
Equity Release can be used for many purposes, including clearing debt, making home improvements, helping your family and going on holidays. These additional funds could give your parents the financial security to enjoy their retirement as they wish.
Find out more about our free Equity Release service here.
Lasting Powers of Attorney
A Lasting Power of Attorney (LPA) allows someone to appoint others to make decisions when they no longer can. A Property and Financial Affairs LPA can give you full legal responsibility over your parent’s estate, ranging from their bank account to properties. An LPA can only be created if they still have mental capacity, so it’s best to arrange it sooner rather than later.
We can help you and your parents set up their LPAs, and make the process as simple as possible.
Trusts can safeguard your parents’ assets for the future.
A Will Trust is written into their Will and protects their half of their home. It keeps it safe from sideways disinheritance and being used to fund their care fees.
A Lifetime Trust acts as a safety deposit box for your parents’ assets, and prevents the need for the costly process of probate. The family can inherit as they wish, at a time suitable to their needs. A Trust offers more control over you and your parents’ future.
How we can help
If you’re unsure of the best way to help your parents, the safest option is to consult an expert. Our consultants have over 50 years of experience. We work with leading Solicitors, Accountants and Independent Financial Advisers, and can guide your parents in making the right decisions for later life planning.