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This article is for general guidance only and is not financial or professional advice. Any links are for your own information, and do not constitute any form of recommendation by Saga. You should not solely rely on this information to make any decisions, and consider seeking independent professional advice. All figures and information in this article are correct at the time of publishing, but laws, entitlements, tax treatments and allowances may change in the future.
Taking charge of your parent’s finances can feel daunting, particularly if you’re also juggling work and family responsibilities. But as your parents age, there’s a good chance they’ll need support to stay on top of bills, banking and everyday money management.
A diagnosis of dementia, or another serious health condition, means they’re likely to need help in future, even if they can still manage for now. Someone with dementia may eventually be unable to make decisions about finances, health, or welfare.
Sarah Coles, head of personal finance at Hargreaves Lansdown, says it’s a good idea to look for early signs a parent may be struggling. Indications may be that they don’t have the money they usually have for essentials, they’re not opening their post, or they seem anxious, vague, defensive or angry about money.
“The earlier you can take steps to help in these scenarios, the easier life could be for everyone,” she adds.
Your parent may simply need help with basic tasks such as paying bills, setting up direct debits or managing online banking.
However, over time, your role might evolve into managing all aspects of their finances through a lasting power of attorney (LPA), giving you legal authority to act on their behalf.
An LPA allows you to manage your parent’s finances and make decisions on their behalf when they are no longer able to do so themselves.
Caroline Abrahams, Charity Director at Age UK, says she always encourages older people and those closest to them to think seriously about taking out a power of attorney, well in advance of any suggestion that it may be required. “If you haven’t already, start the process of setting up a lasting power of attorney (LPA) now, as the process can take months,” she says.
There are two types:
The LPA must be registered with the Office of the Public Guardian. If you wait too long and your parent loses capacity, you will need to apply to the Court of Protection to become their Deputy, which can be a lengthy, stressful, and costly process.
A joint account in both your and your parent’s names can provide easier access to their money for day-to-day expenses, but it’s not a long-term solution. “If your parent loses capacity, the bank will freeze the account,” warns Kirsty Limacher, chief legal officer at the Association of Lifetime Lawyers. “It can also lead to complications if disputes arise with other family members.”
A third-party mandate can offer an alternative to a joint account, allowing you to manage specific transactions on their behalf. This is a formal instruction given to the bank, giving you permission to carry out certain transactions, such as paying bills. You can set this up by contacting your parent's bank and completing the necessary forms.
Beware, though, that it doesn’t provide the same level of authority as an LPA, and may not be valid if your parent loses mental capacity.
If your parent is in receipt of benefits, Limacher suggests applying to the Department for Work and Pensions (DWP) to become their ‘appointee.’ This gives you authority to manage and spend their benefits, including their state pension, in their best interests.
One of the most helpful steps you can take is to streamline your parent’s basic financial setup. For example, you could consolidate several bank accounts into one, making it easier to manage passwords, paperwork and spending.
Setting up direct debits for regular bills such as utilities or council tax for your parent ensures they’re always paid on time. Most service providers have online forms that allow you to set these up easily.
If your parent has a credit card, reducing its limit can help manage overspending. Some banks allow family members to monitor accounts or set spending caps, which can be helpful for some people.
Letting their bank know that they’re struggling to manage their finances could open the door to extra support. Banks often provide tailored support for vulnerable customers, such as those with dementia.
They may add safeguards such as a nominated contact for particular issues, spending limits, or accounts without overdraft facilities.
To help protect a parent from financial scams, consider registering them with the Telephone Preference Service (TPS) to reduce unwanted calls, and the Mail Preference Service (MPS) to reduce unsolicited mail.
You can also set up fraud alerts with their bank and help your parents install a call-blocking device or software. Talking to them about common scams and encouraging them to check in with you before making any large transactions could also reduce their chances of being a victim.
If they do fall victim to a scam, it’s worth knowing that the new fraud refund rules offer an extra layer of protection for “vulnerable” customers. But the rules don’t apply in some circumstances, such as when money is sent overseas.
We’ll help you appoint a person you trust, who can make choices for you if you’re not able to.
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