We may expect our older relatives to become forgetful, or to be little slower than they used to be.
But when the natural aging process starts to become something more serious, they may be at risk financially. Dementia involves a loss of cognitive functioning—thinking, remembering, and reasoning—that can interfere with daily life and activities.
A loved one may seem capable of everyday living, however, they may in fact no longer be able to manage their money. They may lose cash or debit cards and find it harder to keep track of cash. They may overspend or be prone to sudden and unwise generosity. Worse, they may become an easy victim for predators who will overcharge them for shopping or work around the home or swindle them out of savings.
A report by Alzheimer’s Society reveals that 76% of those with dementia had faced difficulties in managing money. More than a third of carers had also experienced problems managing the money of the person they support.
At Continuum we are looking at ways to help protect your loved one’s finances and reduce the risk of future problems with money.
Conversations about ageing, dementia and finances can be uncomfortable but are vital particularly if care provision is likely to be necessary later down the line. It is essential to have the conversation while your loved one is still fully able to understand it and agree to the changes they need.
Simplify their financial challenges
Often people with dementia can continue with day-to-day finances, such as shopping, but struggle with more complex decisions. For example, they may find it difficult to change their energy supplier or make choices about investments.
There are some easy ways to simplify the challenges of money management.
- Direct Debits and Standing Orders: Set up direct debits or standing orders for regular bills and subscriptions. This ensures they are paid on time and avoids the risk of having gas or electricity disconnected.
- Centralise Income: Have all income including pensions and benefits paid into one bank or building society account to avoid confusion.
- Go cashfree. Cash can become harder to manage as dementia progresses, and taking out and carrying cash can be a risk. With cash no longer an essential, using a card can be a better solution – particularly as most banks will be able to provide a card with a daily spending limit, reducing the chance of your loved one being taken advantage of by fraudsters.
Get Lasting Power of Attorney
Sadly, decline will often progress to the stage where it is no longer possible to live independently. You need to be able to manage their financial affairs for them. To do this you will need Lasting Power of Attorney (LPA).
This needs to be arranged while they still have the capacity to agree to it.
There are two types of LPA:
Property & Financial
This allows you to make decisions about money on their behalf or even selling their property to pay for care in a home. You can apply for LPA on your own, or the person with dementia can have more than one person acting on their behalf. It’s essential that you trust the other attorneys. You will have the authority to check their bank balances, transfer funds, make online payments for them and order cheque books on their behalf. To do this, you will need to go into the bank with them, and take identification, including passports and proof of address.
Health & Welfare
You can also take responsibility for decisions about health and wellbeing.
This can include decisions about their medical care. It’s an essential document to have for the future, and you must act with the best of intentions and with the person’s wishes in mind.
If you are unsure about whether someone still has capacity to make an LPA, it’s worth speaking to a solicitor.
How Continuum can help
At Continuum we help people at every stage of their financial lives, and we know the particular challenges you can face when caring for an older relative. The challenges of selling a property and moving into a home and avoiding tax pitfalls all need expert support.
We can advise on the everyday challenges, and provide practical help with matters such as investment, and on the best way to pay for their care.
The sooner you have plans in place, the simpler they can be, and the better the outlook for you and the person you care about.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice, or a recommendation to create a lasting power of attorney and you should seek independent financial advice and legal advice before embarking on any course of action.
The value and returns of an investment are not guaranteed, investors may lose some or all of their investment. Capital is at risk.
The Financial Conduct Authority does not regulate taxation advice.
