Find time to talk finances with your loved ones

IT’S GOOD to talk, especially about important subjects such as family finances, but many Britons find the subject of money too embarrassing to discuss. Nearly a third of adults have never discussed their parents’ financial circumstances, research from equity release lender More2Life shows, but failing to do so can be an expensive mistake.

British reserve is all very well, but families have to make difficult decisions in later life, over pensions, property, care, equity release and inheritances. Failing to discuss these issues could trigger family disputes and potentially cost tens of thousands of pounds. Parents and children need to get talking. Here’s how to do it.

FAMILY TIES

More2Life chief executive Dave Harris said family finances are more closely intertwined than ever, as parents and grandparents help the younger generation get on, while planning for their own final years: “People’s personal finances are, well, personal, but it is important to talk openly and honestly about them.”

Jenny Pierce, director at Solicitors for the Elderly and partner at Wards Solicitors in Bristol, said it is never too early to talk with loved ones, executors and attorneys about later life: “Planning ahead should not be doom and gloom, it is about having a positive conversation.”

Set out what assets you have and where they are, otherwise valuable pension, investment, savings and insurance plans could go astray. “This can help your attorneys, executors and solicitor manage your assets as you have requested,” she said.

Also discuss your digital footprint, such as social media posts, emails, online banking, and so on. “Otherwise how will those you leave behind know about it?”

Pierce said talking today can prevent trouble and expense tomorrow: “It makes it far less likely that someone will contest your will or estate.”

GET THE POWER

Rachael Griffin, tax and financial planning expert at wealth manager Quilter, said families also need to discuss setting up a Lasting Power of Attorney (LPA): “This gives a trusted family member or friend the legal authority to make health or financial decisions on your behalf if you lose mental capacity.”

More than two million people will suffer from dementia by 2051, according to the Alzheimer’s Society, so this is a conversation many need to have. Griffin said you have to set up an LPA while still of sound mind, because afterwards your family must apply to the Court of Protection, a lengthy and costly process: “The court will appoint a deputy who may not have been your first choice.”

Do not assume your spouse or partner can automatically make decisions on your behalf if you cannot. “Without an LPA, they will not have the authority,” she added.

TALK ABOUT TAX

Deborah Stone, a consultant at MatureThinking.co.uk, which helps companies develop financial products for older people, said you should urgently write a will, or update your old one, to make sure it still reflects your wishes, your assets go to the right beneficiaries, and any inheritance tax liability is minimised: “Otherwise you are at the mercy of intestacy rules, which may not reflect your wishes.”

You may also want to seek specialist advice to discuss more complicated areas of tax planning, such as trusts.

Younger family members can offer practical help, such as checking whether older relatives have smoke or carbon monoxide alarms, or a fall alarm if they are becoming unsteady. “You can also make their home safer by removing trailing wires, fixing loose or fraying carpets, and ensuring lighting is good,” Stone said.

Incredibly, a third of all people over 65 fall at home every year and over 40 per cent of those over 80, she added.

PAYING FOR CARE

At some point, older people may be unable to continue living at home. Stone said: “Would they like to live with you and would you like this? You need to consider the impact on your own relationships. Or would they prefer a retirement community with a warden and nursing staff?”

Social care is a big concern, as people only get full state support in England when their assets, including their home, fall below £23,250.

Families need to discuss issues about how to save for care costs, or whether to buy a care fees annuity, which pays a pre-agreed income to a care provider for the rest of the person’s life, Stone said. Funeral planning is another important issue: “People struggle to make informed decisions when they are bereaved, and forward planning helps.”

‘Otherwise you are at the mercy of intestacy rules, which may not reflect your wishes’

TIME TO TALK

Stone said that younger family members can also register older parents as disabled: “This gives them access to certain facilities such as disabled parking, toilets with a key, a Disabled Person’s Railcard, discounts at some leisure facilities and VAT-free disability equipment.”

Many pensioners are missing out on thousands of pounds of income by failing to claim state benefits, particularly pension credit and attendance allowance for those with severe disabilities. Half of those lose out on an average £1,139 a year and Stephen Lowe, group communications director at retirement specialists Just Group, said: “The money would make a meaningful difference to people’s lives and families should help them claim.”

There is plenty you can do to help your older relatives, but first you have to start talking.