Managing money in your later years

4 min Read Published: 05 Feb 2013

As people get older, or suffer from poor health, they may need help with handling their finances. They may just be less mobile than they used to be or are having to spend some time in hospital. Or they may have been diagnosed with an illness, such as dementia. So what are the options when managing their finances becomes more difficult?

The options if they still have the capacity to make decisions

  • Create a joint account with a carer, friend or relative, who they trust, so they have access to their money to pay bills etc. This account could be set up for cheques only, with all cheques having to be countersigned by the account holder for added security.
  • If they receive benefits or a State Pension then they can arrange to have these paid by giro cheque. If they sign the back of the cheque then the trusted person can cash these cheques on their behalf.
  • Arrange for all their bills to be paid by direct debit which will make sure that they are paid on time without causing any stress.
  • If they have a Post Office account then they can arrange for a trusted person to have permanent access.
  • I would warn, however, against sharing a PIN number with anybody as this could compromise the security of the account

What are the options if they need something longer term or lack the capacity to make decisions?

If they need to make more long-term plans, due to illness such as dementia, then they may consider creating a Power of Attorney. There are two types of Power of Attorney.

Ordinary Power of Attorney

  • This is normally set up for a limited period of time and is suitable for someone who is due to spend some time in hospital or may be away for an extended holiday
  • Only valid while the donor has still got the mental capacity to make their own decisions
  • The power given to the attorney can be limited to certain assets only
Lasting Power Attorney (two types)

Property and Financial Affairs LPA

  • The attorney can make decisions such as buying or selling a property or investing money
  • Any arrangement would still continue even if the donor was unable to make their own decisions
  • The donor can restrict or specify the types of decisions made on their behalf
Personal Welfare LPA

  • The attorney can make decisions such as where the donor should live and consent to medical treatment
  • Any arrangement would still continue even if the donor was unable to make their own decisions
  • The donor can restrict or specify the types of decisions made on their behalf
How can a Power of Attorney be arranged?

  • Is only valid if arranged if the donor has the mental capacity to set it up and has not been put under undue pressure
  • In order to be valid the PLA must be registered with Office of the Public Guardian
  • To register an LPA a form must be completed which is available here or alternatively arrange for a solicitor to complete the whole process
  • There is currently a fee of £130 per LPA plus any solicitor fees
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