Helping your elderly parents with money
Give your folks the financial security they deserve
We all imagine that retirement will be a golden age in our lives, free from stress and work, with plenty of time to home grow veg, dote on grandkids or head off across the world on extended gap years. Many people manage to keep their independence as they become older, but sadly that’s not always the case. If you notice that your mum or dad is struggling to manage their finances, there are things you can do to help.
Signs your parents may be struggling
There may not be much evidence that your parent is finding it harder to deal with day-to-day finances, but lots of unopened post or red bills are normally a giveaway. Or maybe you’ve noticed the house is full of things they don’t need, which could indicate they’re struggling to make wise spending choices or have fallen foul of scammers.
If you suspect your parents need help, try and talk to them. It may not be easy, but if you’re still concerned, you could ask a friend or close neighbour if they’ve noticed any change.
It may feel a bit like snooping but it’s far better to do your best to find out if help is needed, even if it’s refused, than for your mum or dad to have to struggle or even worse be scammed.
What can you do if your parents are struggling?
Helping your parents with their money may be as straightforward as spending an hour or two going through letters and bills, but it may mean you have to get more involved. Here are some options available to you:
Option 1: Get permission to discuss household bills on your parents’ behalf
Companies will generally only deal with the person whose name is on the account. So, if you want to help your mum or dad with things like gas and electricity bills, home insurance or phone and broadband, ask the company what their procedure is.
You may need to ask your parent to write (or sign) a letter saying they’re happy for you to discuss their account with the company, or the company may be happy with permission given on the phone.
Bear in mind that if you already have the legal power to deal with your parents’ finances, through a power of attorney, you don’t need additional permission. All you need to do is provide evidence of the power of attorney.
Option 2: Set up a third-party mandate on bank accounts
A third-party mandate means your parent gives their bank permission to accept instructions from you for day-to-day banking. Speak to your parent’s bank to do this. Normally you won’t be able to open or close the account or increase an overdraft, but you will be able to set up Direct Debits and pay bills, giving your parents one less thing to worry about.
Option 3: Become a joint account holder
This means you can run the account jointly with your parents, so they’ll need to be comfortable with the idea of you having complete access to the account. The disadvantage of being a joint account holder is that you are each liable for any debts on the account and – legally – the money in it belongs to both of you.
Option 4: Set up a second account
If your parents don’t want you to have direct access to their main bank account, they could set up a second account and pay a regular amount into it – perhaps through a monthly standing order. You can then become a joint account holder so you can pay bills on their behalf.
Option 5: Draw up an ongoing power of attorney
An ongoing power of attorney is a legal document that gives another person (the attorney) the right to manage all of someone’s finances on their behalf if they no longer can. It’s much more wide ranging than just their bank account as you can pay bills, buy or sell their home and invest money on their behalf. Your parent can only draw up a power of attorney while they’re still able to decide whether or not it’s what they want, and are able to understand the implications of having one. And then if your mum or dad were to get dementia, for example, or another illness that meant they no longer have what’s called ‘mental capacity’, the power of attorney can be activated. Your parents can draw up a power of attorney themselves online via gov.uk for England and Wales or mygov.scot for Scotland, or they can use a solicitor.
Watch out for scams
Scammers and fraudsters are very aware that an increasing number of older people struggle with day-to-day financial tasks. Scams can range from the long-established trick of charging way over the odds for home repairs (or doing repairs that aren’t needed), to computer and investment scams.
If you’re worried that your mum or dad could be vulnerable to scammers, make sure they’re registered on the Telephone Preference Service. This will reduce the number of cold calls they receive, but won’t get rid of scam calls altogether. You can also register with the Mail Preference Service to reduce the amount of junk mail your parents get.
There’s a guide called ‘Difficulties Making Payments’ on PayYourWay.org.uk and the British Bankers’ Association website has a downloadable guide for people who want to manage an account for someone else.
These, then, are the key options when it comes to stepping in and helping your parents when they’re struggling to stay on top of their finances. Hopefully whatever you do will take a weight off their shoulders – and give them more time for all that veg growing, grandkid-doting and globetrotting they should be enjoying.
Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.