It’s not easy to discuss financial matters with loved ones and when failing health is a factor too, the conversations can be trickier but even more vital.
If you’re worried about the health of a parent or relative there are a number of things you can do now to help ensure peace of mind and financial security.
Here are some things to consider:
Speak to us if you’d like to discuss any aspect of estate planning or the future care of a loved one. We’re here to help you.
If you suspect a parent or relative is becoming ill, it’s only natural to worry. One way to partially alleviate your concern is to take proactive steps to ensure their financial planning is in place, up to date, and on track.
This doesn’t need to wait until someone becomes ill, but if that moment has arrived, decisive plan-making can give all parties involved enormous peace of mind.
Here are some things you can do now to plan for the future and ensure you and your loved ones are financially secure.
Have a conversation
The first thing to do is to have a conversation with your parent or relative. Do this as soon as you feel there may an issue, ideally beforehand. There are arrangements to be made and plans for the future to put in place and the sooner these begin the better.
There are some key questions you’ll need to ask your parent or relative:
- Do they currently have a financial adviser?
If they do, ensure that you have the adviser’s details. If a Power of Attorney is put in place in the future, you might find you have to make financial decisions on your parent’s behalf, and knowing who their current adviser is will help with that.
If they don’t currently an adviser, we’re here to help.
- Do they have preferences on the type of care they will receive?
The type of care a loved one receives in later life clearly depends on the nature of their needs. Having a conversation early on in an illness can set both parties’ minds at ease.
If a loved one is determined to remain in their own home for as long as possible, you’ll need to think about the cost of home care visits and/or adaptations to their home that might be needed to ensure they can be looked after safely.
If downsizing will be required to pay for the cost of later life care, this might help to fund a move to sheltered accommodation or a care home.
Different types of care will come with different costs attached so it’s important that you plan based on a loved one’s wishes and that means having the difficult conversations now.
- Do they know who they want to look after their finances?
They might have a trusted adviser who they’ve been working with for a number of years and who understands their plans and goals but if this isn’t the case the onus might fall on to you to look after their affairs.
To do this, you will need to have frank discussions with them now.
Do some research
Whether it’s the technical side of benefit applications or the latest scientific research into a given illness, you may be dealing with things you haven’t had to contemplate before. This is where research comes in.
- Are they entitled to any benefits or grants?
Some benefits, such as Attendance Allowance, are not means-tested, although certain eligibility criteria still apply. The payments are £59.70 a week at the lower rate and £89.15 at the higher rate.
Your parent or relative must be at least of state retirement age and have a physical or mental disability/illness, or both, that is severe enough that they need help or supervision to care for themselves, for their own safety or that of others.
They must also have needed that help for at least six months (unless they’re terminally ill, in which case a claim can be made straight away).
Depending on the severity of the illness and the type of care that they are receiving it might be possible for you to collect a Carer’s Allowance.
The allowance is £67.25 a week in 2020/21 but you can only claim it if you spend at least 35 hours a week caring for someone and earn £128 a week or less (after taxes, care costs while you’re at work and 50% of what you pay into your pension).
Conducting research as early as possible means that you can apply for relevant grants or benefits as soon as you or your parent become eligible and factor them into your budgeting and planning.
- Don’t rush into a decision at ‘crisis’ point
As well as understanding the financial help available, understanding the underlying cause of your parent or relative’s ill-health will also help you to plan for their financial future.
Researching a specific condition or ailment can help you to understand the possible outcomes and options for the future.
If you find that decreased mental capacity might become an issue, you’ll need to think about arranging a Power of Attorney. The conversations you have now will become even more important.
Where a physical disability is liable to worsen, the route from care at home to assisted living to eventual full-time care might become clearer.
Knowing what the future might hold will give you the best chance of making informed decisions at the right times.
- Ensure there is a Power of Attorney
Once you’ve had the difficult conversations and done the necessary research, there are some concrete actions you can take.
Make sure that your parent or relative has put a Power of Attorney in place.
Enduring Power of Attorneys (EPAs) were replaced on 1st October 2007 but any document signed before that date is still valid. EPAs were replaced by Lasting Power of Attorneys (LPAs) and these can be more flexible.
An LPA is a legal document that will allow your parent or relative to choose the person who will manage their affairs once they’re no longer able. There are two main types.
A Health and Welfare LPA covers things like daily routine, medical treatment, and moving into care, whereas a Property and Financial Affairs LPA allows a chosen attorney to manage finances, pay bills and collect benefits on someone else’s behalf.
They must be made whilst your parent or relative has the mental capacity to do so and can be registered when needed. Having an LPA in place can speed up the process of gaining control of someone’s finances, as well as giving all concerned parties enormous peace of mind.
Remember that your surviving parent or your relative’s spouse won’t have access to anything that isn’t jointly held, and children won’t have access to anything unless there is a Financial Affairs LPA in place.
- Ensure there is an up-to-date will in place
Ensuring your parent or relative has an up-to-date will in place is vitally important. This will ensure their estate is distributed in line with their wishes. If it’s not up to date, suggest they do this as a matter of urgency.
Dying without a will (or ‘intestate’), means that your loved one will have no say over what happens to their estate and therefore there is no guarantee that it will tally with their wishes.
- Keep paperwork together
Once you have ensured there is a will and an LPA in place, being organised means knowing where all the paperwork is kept. They should all be kept together, in one secure place to ensure that adviser, solicitor, and executor can find them easily when needed.
Remember that these organisational tips apply to you too. Everyone should have a will and LPAs in place to guard against the unexpected and the paperwork should be kept securely where others know to find it.
The illness of a relative or loved one will always be a worrying time but there are resources and organisations out there that can help.
- Age UK offers a wealth of advice on financial and care matters, from benefits and end of life planning to information on illnesses and tips for funding and paying for care
- The NHS website is packed with information, tips and help on understanding illness, supporting those who are ill and providing care
- Citizens Advice can help answer any queries you have about benefits, such as Attendance Allowance, as well as caring for the sick or disabled
There are a lot of things to consider when a relative becomes ill and timely planning can provide peace of mind as well as ensuring that all necessary financial matters are dealt with.
Planning needs to begin with a conversation but once you know what your parent or relative’s wishes are, we are here for you. At First Wealth, our expert financial planners can help you put a plan in place to meet your loved one’s wishes whilst maintaining your own financial security.
We can discuss the cost of later life care and Inheritance Tax Planning and help you to put your whole family in the best possible position.
If you’d like to discuss any aspect of financial planning for you or an ill parent or relative, please get in touch.
The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation which is subject to change.