Caring for an elderly relative can carry a physical, emotional and mental strain. However, it’s also a labor of love.
In this guide, we’ve put together a range of tips to help you manage the finances of an elderly relative.
In This Post:
Communicate and Advise
You should aim to have an honest and open discussion with your parent(s) before you begin managing their finances. Discuss everything relating to their finances with them, including what accounts they have and exactly how much money is in their possession. You should also discuss important matters with them, such as the costs of ongoing care (or care that may be required) and the cost of mobility assistance.
As part of this, you should still advise them if you feel there are ways they should spend their money better. For example, it may be better for them to invest in transport, such as the options available from Mobility Solutions rather than taking taxis everywhere. You may also suggest that they invest some of their cash savings into low-risk investments or find better ways to structure their money after looking at their accounts.
Always remember that the money you’re dealing with is theirs. This means that (unless their mental capacity doesn’t allow for this), you should involve them in the decision-making process. Continually explain why you’re thinking in a certain way, and always reiterate that you’re trying to help them, not take away their independence.
If you have siblings and other family members, you should also communicate with them, so they feel involved.
Once you’ve communicated with everyone, you’ll need to create a plan, splitting your responsibilities into the short-term and the long-term.
Short Term: Helping with Day-to-Day Tasks
Making payments, collecting a pension and paying bills will all require you to have access to their account details and PIN. As a result, you’ll have to apply for a third-party mandate. Here, your parent will have to sign over their rights to you, so they must still be able to make decisions for themselves.
Long Term: Ensure You Have Power of Attorney
‘Power of Attorney’ may sound like legal speak, but it’s actually a very important document. A legally binding power of attorney will allow you to legally act on behalf of your parents. This means that you can make financial decisions for them if they’re unable to make those decisions on their own.
This means you can write cheques for them, pay any bills, change or withdraw their investments and take care of any other financial matters.
If you believe that your parents are becoming senile, or they’re showing signs of dementia, then establishing power of attorney early is important, because the legal document needs to be completed before they become incapacitated. There are different powers of attorney available, so ensure you have the right one.