Sibling relationships destroyed & ultimately rich lawyers. Parents need to talk to their kids, no matter what their choices.
Just Saying, Somerset
- Some adults have received little or no guidance about their parents’ wishes
- A fifth of parents aged 60-plus have never discussed their finances
- How to help an elderly loved one with their money
- Find expert tips below
Nearly half of middle-aged people are anxious about handling their parents’ money once they are no longer able to cope, a cross-generational study has found.
Around a third of people aged 35-59 say they have no idea what their parents’ inheritance plans involve, while two in five say they have some awareness but don’t know all the details.
The reluctance many feel about discussing money matters with family is laid bare by the research from Schroders Personal Wealth, which questioned a 1,000-strong cohort of midlife adults, and the same-sized group of over-60s with at least one child.
Responsible finance: Many middle-aged adults are daunted by the prospect of managing a parent’s money in their later life
This revealed a lack of candour by many in the older generation, a fifth of whom said they had never spoken to their children about their finances at all.
Some 37 percent said their reticence was because they want their children to be financially independent, 28 percent felt it wasn’t their children’s business, and 23 percent thought the conversation would be uncomfortable and overwhelming.
We have previously looked at how older people can prepare for a time they might become unable to handle their own affairs, by setting up power of attorney in advance. We also looked at how to approach creating a will here.
But the Schroders Personal Wealth study shows that the younger generation needs help getting ready for the sad reality of their parents aging and dying too, especially if they have received little or no guidance so far.
What to think about in advance
Schroders suggests the following checklist
– Have you had a conversation with your family about estate planning?
– Do you have a will and a power of attorney?
– Do your children/family know where you keep copies of wills or power of attorney if they needed to find them?
– Do they know which solicitors drew them up if they needed to retrieve the originals?
– Are your pension nominations up to date?
– Have you inherited money recently that could go to your children or grandchildren instead to help save on inheritance tax?
– Does your family know your opinions about going into a care home?
Scroll down for expert tips on what to do if a family member loses the capacity to cope financially, and how to sort out their estate after their death.
Schroders found that 32 percent of people aged 35-59 don’t know whom their parents have appointed as executors of their will.
Some 44 percent of the younger age group said they feel worried about having to manage their parents’ money in the future.
Among those who expressed concern, 52 percent admitted feeling overwhelmed at the prospect, and 50 percent were afraid of doing something wrong.
Some 23 percent said they don’t know anything about finance so wouldn’t know where to start and 34 percent were worried about making decisions that could lose them money.
‘Not knowing about or understanding family finances can cause sleepless nights and feelings of being overwhelmed,’ says Ben Waterhouse, chief client officer at Schroders Personal Wealth.
‘This is where we truly believe that tackling the taboo of talking to your family about money is a key factor for mental well-being.
‘Often, these conversations happen too late, or not at all.’
What you need to know about managing finances of older relatives, and estates of the deceased
Sean McCann, chartered financial planner at NFU Mutual, offers the following tips.
Helping older relatives
– Recognise that interest in and capacity to deal with personal finances can wane with age.
– Many of the same principles of managing your own finances will apply.
– Review utility and insurance bills to make sure they are getting a competitive deal.
– Check bank statements to identify subscriptions or other services that are no longer required.
– Look at cash accounts and investments to make sure they are getting a competitive deal.
– Ensure any life insurance policies are written in trust. This will not only speed up payment on death (proceeds can be paid out without waiting for probate), but it can also protect the proceeds from inheritance tax.
– If they have pensions, ensure that their provider has an up-to-date ‘letter of wishes’ setting out who they would like to benefit on their death. The pension provider will take this into consideration when deciding who any death benefits are paid to.
– Should they like to leave the pension invested on their death, allowing beneficiaries to continue to draw down from it, check if the pension provider offers this facility, as many older pensions don’t.
– Ensure wills are in place – if not, the laws of intestacy will apply which may not suit their wishes. Having a will reduces the risk of family conflict and makes the task of dealing with the estate on death much easier.
– Keep records of any gifts made.
– Keep records of income and expenditure, so that it’s easier to prove that regular gifts made from income qualify for an immediate exemption from inheritance tax.
– Plan for Inheritance tax while your elderly relative still has mental capacity. Those holding power of attorney are limited on the gifts they can make on their relative’s behalf.
Managing the estate of a deceased relative
– Any assets the deceased owned as ‘Joint tenants’ with another person will automatically pass to the surviving owner. This can include bank accounts, investments, and property.
– Collate full details of the deceased’s assets. Often bank statements can help with this, income from share dividends or overseas investments can help you identify the investments they are paid from.
– Similarly, bank statements can be a good place to start when establishing any gifts that have been made in previous years.
– Complete the Government’s ‘Tell us once’ form, this will allow the necessary action to be taken regarding the state pension or benefits the deceased was claiming.
– Let life insurance and pension companies know about the death. Consider taking financial advice on the options available for the payment of pension benefits, which can make a big difference to the amount of inheritance tax payable on the estate of a surviving partner.
– Inheritance tax is based on the value of the estate on the date of death and is normally payable within six months of death. If the executors sell the property within four years at a lower price, they can reclaim any excess inheritance tax. Similarly, if they sell shares or other qualifying investments at a lower price within 12 months of death they can make a reclaim.
knowwhatImeanlike, Belfast, United Kingdom
Easier said than done. No wonder most parents do not fully trust their kids with their money. My brother fleeced our Uncle and my sister is stealing from our late Mother’s estate as an executor. Luckily I am the other executor and will confront her at the right time. She will pay back, one way or another.
Trees, London, United Kingdom
My mother (mid-80s) absolutely refuses to discuss finances with us (4 siblings). Dad died a few years ago. She has a will and I and one brother are the executors and as far as I know, she’s divided it equally between the 4 of us. But when I raised POA with her, her reaction was ‘It doesn’t matter because I’ve got my pension to pay for things’ (she has a teacher’s pension plus a portion of dad’s pension) and I said ‘But it’s no good if we can’t access the money & none of us can afford to pay stuff such as care fees or whatever.’ She’s always been very secretive.
knowwhatImeanlike, Belfast, United Kingdom
If she becomes unable to make her own rational decisions, you can apply for Lasting Power of Attorney.
Annie, Midlands
Even if you have POA in place, unfortunately, a large number of organisations have no idea what to do with them, and that includes solicitors themselves. The whole thing is incredibly stressful.
Itsallchanged, Chelmsford, United Kingdom
Most oldies won’t trust their offspring not to dip into it.
Whins, Scotland, United Kingdom
My parents thought they’d sorted out POA but didn’t realise they actually had to tell me to register and prove my identity with banks etc, and to lodge copies with doctors surgery, pensions, and insurance companies, etc. It’s no use coming home from the solicitor with a POA and sticking it in a drawer. Suddenly I’m having to run around doing all this in addition to everything else I need to do for them.
PerovI, D Norff East, United Kingdom
No need for POA. My mother at the age of 85 agreed that all of her bank accounts would be joint with me. I do have a sister who was also in agreement. We then progressively sold off all of her investments and shares and ploughed these into the joint accounts. When she passed away 12 years later it was all so straightforward.
Whins, Scotland, United Kingdom
Believe me, things are much more difficult these days if you don’t have POA. Just about every organisation or agency asks for it, things you’d never have thought of. I speak from experience.
Sherlock Rose, Cambridge, United Kingdom
There are two separate POAs. One is financial, the other is health and welfare, definitely need to get both.
John, Truro, United Kingdom
POA for finance and property currently takes 20 weeks and longer if you make a mistake. It costs 82 to do it yourself and around 250 for a solicitor to sort.
onanotherplanet, Hertfordshire , United Kingdom
My father is in his mid-80s, I tried to convince him to cancel his full sky package which he pays an absurd amount for every month yet only watches the free-to-view channels. Predictably it ended in an argument (he knows best) so broaching the subject of his finances is going to be very challenging.
frmarcus, Peterboro, United Kingdom
I took over my parents’ finances totally in their 70s and sorted Power of Attorney for them. I’ve no financial expertise but am online and can run things to their advantage, ensuring bills and insurance are in good order, etc. It’s not complicated and removes a burden from them. Obv they trust me implicitly: a trust that should of course exist between parents and adult children.
Whins, Scotland, United Kingdom
You’re lucky you find it easy, I do not. I have never liked dealing with finances and now find myself doing so for my parents. I’m the only one available to do this and to be honest I’m apprehensive about making errors so therefore hate and resent the job.
Gem_Gem, West Yorkshire, United Kingdom
My dad’s on the ball, sorted POA about 5 years ago, will all up to date, all his paperwork is filed immaculately, god he’s even started clearing the house (he’s no hoarder either, its already very minimal) out so I’ve less to do when he goes.
Glitterlover, All that sparkles, United Kingdom
Bless him. sounds like a lovely Dad. He really loves you & cares that you don’t have extra stress when he’s gone.
Just Saying, Somerset
The problem often lies where the parent wants to favour one child over another. They either put it off or keep secrets. Either way, it just leaves an awful mess once they’re gone. Sibling relationships destroyed & ultimately rich lawyers. Parents need to talk to their kids, no matter what their choices.
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