Dealing with their finances will not be most people’s top priority after being diagnosed with dementia. The condition often takes some getting used to, with people having to process what dementia means for them.
However, addressing any financial issues is an important part of long-term planning for those with the condition. Proactive steps can reduce stress further down the line – both for the individual affected and close family members or friends
In this article, we outline some of the common considerations for people, including everyday personal finance, lasting powers of attorney, and how to approach difficult conversations.
For many people, dealing with their day to day finances will be the most immediate financial challenge regarding dementia. If an individual is married or in a civil partnership, the spouse can normally take control of finances on their behalf. But this is only possible if the spouse has lasting power of attorney (LPA) already in place (see below).
For those with dementia – or anybody who needs help with their personal finances – it’s good practice to create a financial passport. This is a folder where key personal details are kept, such as bank account details, utility details or previous address information. Information can then be easily retrieved by family members or friends if needed in the later stages of a condition. Such details should not include passwords for bank accounts though.
People with dementia may also ask someone to help them with their finances more directly. Banks and pension providers will discuss somebody’s personal finances with a third person, provided clear authority has been given, usually via an instruction form or a signed letter. But what you can do on someone else’s behalf may be limited if you just have a written instruction.
A Lasting Power of Attorney (LPA) provides wider powers to look after somebody’s affairs. This is a legal document which names the person who will look after someone’s affairs in case of a loss of mental capacity or death. While it replaced the Enduring Power of Attorney (EPA) system, EPAs set up before October 2007 are still valid. LPAs can be used to manage somebody’s finances, including what to do with any investments or to review wills.
If necessary, the power of attorney can be conferred on more than one person. However, an LPA can only be set up while someone still has mental capacity. An LPA comes into effect at a time of the individual’s choosing, or if they have been deemed to have lost their mental capacity. A separate LPA can be drawn up to deal with health and welfare issues, for example medical treatment and care.
A basic LPA costs £82 in England and Wales (£75 in Scotland, and £115 in Northern Ireland). However, if someone is deemed to have lost mental capacity, you must apply to the Court of Protection for permission to act on their behalf. This can cost £400 and take up to six months to complete. Setting up an LPA in advance can therefore save time and money further down the line. To help settle any potential family disputes, Quilter Cheviot recommends using a legal professional to set up an LPA. Legal fees can start from £150.
The first step in sorting out issues such as personal finances and powers of attorney is to discuss them. Initiating these sensitive conversations may not be easy, but any preparations will help to minimise the complications that come with events such as loss of mental capacity.
It is worth remembering that talking about these things may be easier than you think: such issues could be weighing heavily on somebody’s mind anyway, and they might welcome an offer to help with their finances. Helping with research and managing the paperwork may be the best way to expedite the process and go through all the options, with a view to getting the best possible outcome.
Dementia is a growing challenge for the UK, and one we have decided to tackle head on at Quilter Cheviot. We now have 19 Dementia Champions across our offices in the UK and Ireland, who act as experts and train other employees across our business.
More widely, we have generations of experience advising and helping families through difficult times. We can work with legal specialists who handle wills and LPAs; or with financial advisers to help you find the most tax-efficient way to pass on your assets to your loved ones. The way we do that will change as society changes, but we are committed to make investing and the decisions around it as simple as possible for you.
At Quilter Cheviot, we have experience helping generations of families manage their affairs through later life and in difficult times.
My main responsibility is the management of discretionary private client portfolios, which include individual and family accounts, pensions, offshore bonds, charities, trusts and companies. I work closely with both direct clients and intermediaries as a main point of contact as well as taking a hands-on approach towards the underlying investments within portfolios.
The value of your investments and the income from them can fall and you may not recover what you invested.
