Even if a friend or loved one is still coping at the moment, you can often predict that they’ll need help with their finances in the future. If that’s the case you probably want to help them put some longer-term arrangements into place.
- How you might help
- Appoint someone to make decisions – lasting power of attorney
- Set money aside for a special purpose – trusts
How you might help
Early warning signs will point to someone likely to need help.
For example, if they’re getting older and finding it more difficult to make decisions, or if they’ve been diagnosed with the early stages of dementia.
So you need to start thinking about what will happen when they can no longer manage.
There are two main options – a lasting power of attorney, or a trust.
Appoint someone to make decisions – lasting power of attorney
Remember
Get a lasting power of attorney set up as early as possible – it will be impossible to set up a lasting power of attorney once someone is unable to manage their own affairs.
Often your first step is to ask the person whether they’d consider making a ‘power of attorney’.
This means they give someone else permission to control their money for them.
The person you want to help has to set up the lasting power of attorney, so you need to discuss it with them.
You can reassure them it doesn’t have to be used straight away and they can keep control of their own affairs for as long as they are able to do so.
It’s essential to set up a lasting power of attorney when the person is still well enough to do it.
If you wait until they can’t make their own decisions it will be too late and you have to apply to a court for permission to manage their finances which takes longer and is much more expensive.
Set money aside for a special purpose – trusts
If the person you want to help has a lot of money in savings or investments, you could ask them if they would like to put the investments into trust.
A trust means they can set down more specific rules about how the money can be used.
They can appoint trustees (usually friends or family) to manage the money according to the rules of the trust.
How to help in the meantime
It usually takes at least three months for a power of attorney to be set up, and trusts can take time as well.
In the meantime, there are ways to help people with their money in a more informal way.
You can also encourage them to find ways to make their day-to-day money management easier.
This article is provided by the Money Advice Service.
