Every year, on 1 October, United Nations celebrate senior citizens on the International Day of Older People. Raising awareness of opportunities and challenges faced by ageing populations, the annual event encourages conversation about growing older.
To mark the occasion, read five helpful ways you could support your parents or other elderly relatives manage their finances.
1. Start with a conversation
For some families, money is a taboo subject that isn’t regularly discussed. If this is the case for your family, you may find it tricky to broach the topic of money, especially with your ageing parents.
Conversations about money and health can often be awkward – there’s a reason they’re called “personal” finances. So, sharing details can often be challenging. Likewise, when it comes to talking about your health, there’s often a certain reticence to share information – even with close family.
In either case, when you’re addressing these sensitive topics with your parents, the awkwardness and reluctance may be enhanced. And role reversal could make the conversation even harder to navigate.
So, when you decide the time is right to start asking questions about their financial arrangements with a view to helping them, tread carefully.
That said, once you’ve overcome the initial awkwardness, you may find them willing to share details. In fact, you might even discover that they’d been wanting to talk but didn’t want to worry you.
2. Help them get organised
A key priority is to ensure their records are in order and everything is accessible and organised.
Knowing their affairs are straight will give you – and your elderly relatives – valuable peace of mind. Going through the paperwork could also help to shine a light on issues that may need urgent attention.
With everything organised, you’ll also have an idea of their overall financial position and whether they need financial support now, as they may have been reluctant to ask for help so far.
Alternatively, you’ll be aware of whether you could be facing a large Inheritance Tax (IHT) bill.
Read more: Intergenerational wealth planning: Is it time to talk money?
Finally, make sure that they have appropriate bank accounts. With many banks and building societies closing branches on the high street, it may be sensible to move accounts to allow them continued access to all their banking needs. This may be especially important if they are keen to maintain their independence and are resistant to or unfamiliar with managing savings and bank accounts on their phone or computer.
3. Ensure they have Lasting Power of Attorney set up
If you are concerned about your elderly relative succumbing to ill-health or dementia, it’s crucial to set up a Lasting Power of Attorney (LPA). So, if they don’t already have one in place, make this a priority.
There are two different types of LPA:
- A Property and affairs LPA, which will allow you or someone else they trust access and permission to take care of their property and financial affairs.
- A Health and welfare LPA, which allows your chosen attorney to make decisions about your care and medical treatment.
To draw up an LPA you need to have “mental capacity”. This means your relative must be able to understand what an LPA is and what making one means.
As well as giving them the reassurance that their affairs will be well cared for, having an official property and affairs LPA in place speeds up the ability to gain control of their finances in the event that they are no longer capable.
It will also mean it’s quicker and simpler for them to pass responsibility for their finances to someone else, should they find the task becomes too much of a burden.
4. Check they have written their wills and kept them up to date
Another priority should be to check that your relatives have written their will, and that it is up to date and still relevant to their circumstances. If it’s a while since the will was written, it may be wise to review the details and talk to them about any necessary updates.
For example, if there have been any births, deaths, or relationship breakdowns in the family, they may want to reassess their named beneficiaries.
This will ensure that, when they die, their estate is distributed in line with their wishes, and also gives them the opportunity to decide who will be responsible for distributing their wealth.
If you know that their estate may be subject to Inheritance Tax (IHT), talk to them about the possibility of drawing up an estate plan. Gifting during their lifetime could allow time to reduce the value of their estate before they pass away.
This could help you and other beneficiaries to avoid paying IHT on the entire inheritance.
Read more: 3 clever ways to reduce a potential Inheritance Tax bill
5. Think ahead to potential care requirements
As your parents age, they may grow frail and could face health problems. If so, they might need extra support.
Having a conversation about later-life care with them sooner rather than later could allow valuable time to help you reach crucial decisions together.
One important factor to consider is the cost of care and how they might pay for this should the need arise.
According to carehome.co.uk the average cost of a residential care home in the UK in 2024 is £1,160 a week. Meanwhile, the average cost of living in a nursing home in 2024 is £1,410 a week.
This is a significant expense, so planning early could help make the difference. And, if they can’t afford it alone, you’ll know ahead of time if they might need your support.
Read more: 3 sensible reasons to plan ahead for your later-life care arrangements
Remember, it’s entirely possible that their needs could be looked after at home, perhaps through a domiciliary care package. An alternative option may be to sell their current property and use the capital to move into a retirement home with self-contained flats and on-call support. Such a move could help them retain a greater degree of independence for longer.
Get in touch
To find out more about financial planning for your elderly relatives and how we can help, please get in touch. Email info@lloydosullivan.co.uk or call 020 8941 9779 to see how we can assist you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate estate planning, tax planning, Lasting Powers of Attorney, or will writing.
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