Planning for the future with 10 things you should know about your ageing parents
As your parents become older, it becomes more important that you are able to talk with your parents about what happens when it comes to the point that they need looking after, or may not have the capacity to take care of their financial affairs. And finding out what you need to do to ensure that financially, everything is in order. Here are the top 10 things you should know about your parents’ finances.
1. Power of Attorney
Power of Attorney is a legal way to enable someone to make all the financial decisions for another person. It should be used to help someone, should they not wish to look after their own finances any longer, or they no longer have the capacity to do so.
If it is likely, due to illness that a parent will in the future not have full mental capacity, then a Power of Attorney should be arranged at the earliest opportunity. If possible, this should be arranged before the person no longer has the capacity to make their own decisions, as could be the case following a dementia diagnosis.
There are two different types of Power of Attorney:
Ordinary Power of Attorney – this offers the person the ability to provide Power of Attorney to another while they have the mental capacity to do so. It may be that they wish to do this while they are in hospital for example as a temporary measure.
Lasting Power of Attorney – this option offers a longer term solution, and it may be used when the person does not have the mental capacity or health to be able to manage their finances themselves. It also means that they care and support can be managed for them. A lasting Power of Attorney can be the best option to set up following a dementia diagnosis for example.
Your parents can also decide what types of financial things the nominated person can control, as well as having more than one person with the Power of Attorney. If you have siblings, it can be good to share the responsibilities.
When using a Lasting Power of Attorney for making decisions about care and support – if there is an opportunity to understand the person’s wishes first, it can be easier to implement their choices, rather than being in the potentially difficult position of trying to work out what they would want.
2. What are your parents monthly expenditures?
You will need to know what they spend their money on each month. Things like their water rates, council tax, energy bills and other essential payments that must be taken care of each month. When finding out these things, it may also be apparent they are paying too much.
It’s good to know what grants and benefits they can get to bring their bills down.
3. How are they currently paying their bills?
Check how each bill is paid. Some might be paid online, some direct debit, and others may still be paid by using Bank Giros at the Post Office.
4. Where do they keep all of their financial paper work?
Many older people are great at keeping order with their financial paperwork. They may just be able to point you in the right direction of where their bills, insurance policies, mortgage and bank statements are kept.
If they are not that organised, and are unsure of where things are, then you may need to help them look for it all, or order copies so that you can put them all into one place.
5. Are they in receipt of any state pensions or benefits?
If they are receiving benefits, such as a state pension, you will need to ensure that you include collecting the pension, as well as any other benefits they receive with a Power of Attorney.
6. Savings and investments
Your ageing parents might also be receiving savings interests and dividends as another income. You will need to ensure you know where the paperwork for these are, as well as being able to manage it on their behalf when the time comes.
7. Have your parents made a will?
It might be a sensitive subject but you need to check that your parents have made a will and named an executor. If no executor is named then you will need to apply for probate. Probate also applies if the estate is worth more than a certain amount. Ensure they have made will and testament of what they wish to happen with their estate in the event of their death.
8. Do they have any debts?
If your parents have debts, it’s important to know how much and how long is left to pay. Although you are not responsible for this debt as long as you are not named on the debt, or are a payment guarantor. Settlement of any debts will need to come out of the estate before any inheritance is paid.
9. Do they have any financial brokers or accountants?
Your parents may have a family accountant, or financial broker so ensure you know their contact details and are up to speed with what they handle for your parents.
10. Do they have any health or care insurances
Health and care insurances can help to pay for their long term care needs so if they have any policies to cover this, ensure you know where the paperwork is and that you are able to control this should the need arise.