It’s natural to find financial conversations with elderly relatives difficult, as money can feel like an awkward or intrusive topic.
However, these discussions are about protecting your relatives and ensuring their wishes are respected, as well as giving them peace of mind that their financial affairs are in order.
That said, as these topics are sensitive, it’s important to be considerate and careful when broaching them.
With this in mind, here are five important financial questions to ask your older relatives.
1. Do they have a Lasting Power of Attorney?
It’s important to find out early whether your relatives have a Lasting Power of Attorney (LPA) in place, as it could become essential at any time. An LPA is a legal arrangement that allows a trusted person to make decisions on your relative’s behalf if they lose mental capacity.
There are two main types of LPA:
- Health and Welfare LPA – This gives the attorney authority to make decisions about medical care, moving into a care home, and any life-sustaining treatments.
- Property and Financial Affairs LPA – This allows the attorney to manage bank accounts, pay bills, collect benefits such as pensions, and even sell property.
Typically, a health and welfare LPA only takes effect if the donor loses capacity, whereas a property and financial affairs LPA can be used immediately.
Your relative must have full mental capacity to set up an LPA, so it’s important to act sooner rather than later.
2. Do they have a plan for potential future care costs or alternative living arrangements?
As relatives grow older, you may choose to invite them to live at home with you. This can keep them close to loved ones and potentially reduce care costs. However, it can also bring significant lifestyle changes and added responsibilities that may be challenging to manage.
Depending on their needs, they may later require professional elderly care. Whether delivered in their own home or through a care home, this can be very expensive, so it’s important to have a clear plan in place.
Exploring funding options early, such as savings, pensions, or annuities, can help ensure your relatives receive the right level of care without placing financial strain on the family.
By having these conversations ahead of time, you can provide reassurance, avoid rushed decisions, and ensure their wellbeing is properly supported.
3. Are their will and pension nominations up to date?
An up-to-date will ensures your relative’s estate is passed on according to their wishes and that their assets are managed efficiently.
If they don’t have a will, they will die intestate, which means strict inheritance rules will apply and some of their loved ones could miss out. Even if they already have a will, it’s important to make sure it is current and reflective of their circumstances and wishes.
It’s generally recommended to review and update a will at least every five years, or after major life events such as bereavement, marriage, or the birth of a child. Doing so can help minimise the risk of disputes, reduce unnecessary delays, and ensure a smooth transfer of wealth.
On top of this, it’s also a good idea to ensure their pension nominations are up to date. These are often treated separately from a will, and if they’re not updated, it may be left to the provider to decide who receives their pension.
Having these conversations early not only provides clarity but also gives your relatives confidence that their wishes will be respected.
4. Have they explored estate planning strategies?
To help fulfil your relative’s legacy wishes, there’s a range of estate planning strategies they may want to consider.
For example, if they want to provide for younger generations, perhaps to help fund education or support a first home purchase, they may want to explore setting up a trust.
Trusts can be particularly useful in complex family situations or when there are concerns about financial responsibility, as they allow your relative to retain control over how and when wealth is distributed after they pass away. However, without clear communication, trusts can sometimes lead to confusion or tension.
Your relative may also wish to explore gifting options, which can provide more immediate support to loved ones while also reducing the size of their taxable estate.
Discussing these options early ensures their estate remains efficient and that everyone understands the intent behind their decisions. This not only helps maintain harmony but also strengthens the chances of your relative’s legacy being honoured exactly as they intended.
5. Have they spoken to a financial planner?
A financial planner can work with your older relatives to ensure their needs and wishes are met. This could include helping them to:
- Write or update a will
- Register a Lasting Power of Attorney (LPA)
- Explore options for funding long-term care
- Develop an estate plan that boosts their legacy.
A financial planner can also act as a neutral third party, helping to ensure all conversations are conducted with care and consideration, and guiding discussions toward solutions that work for everyone.
To speak to a financial planner, get in touch.
Email us at hello@vwmwealth.com or call us on 0141 229 4004.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
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.
The Financial Conduct Authority does not regulate estate planning, cashflow planning, tax planning, trusts, Lasting Powers of Attorney, or will writing.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
