Taking care of a parent or loved one can be a huge challenge, whether you are caring for them yourself, or responsible for making sure they get the professional support they need.
One particular element of this process that is sometimes under-discussed is how to manage the finances of the person who needs care, whether it’s helping them to sort out how they’ll pay for it, paying bills on their behalf if you’re looking after them, or working out the best way to give money to a live-in carer so they can, for example, buy groceries on your loved one’s behalf.
Fortunately, there are a few steps you can take which may make life easier – we go through them below.
Setting up a third party mandate
Most banks allow you to set up what is known as a third party mandate or third party access. This is an arrangement that allows you to access the account of the person who needs care, in order to make basic transactions.
The person whose account it is must have mental capacity in order to grant a third party mandate – in other words, they will need to know what they are doing and be able to consent to you accessing their account. They can also choose to set limitations as to what you can do with their account in the terms of the mandate, though there tend to be fairly strict rules in place to begin with. With a third party mandate, you can typically:
- Withdraw a certain amount per day (typically up to £500), though they can choose a lower limit)
- Pay money into the account
- Pay a bill or invoice by cheque – the bank may require this to be brought to a branch so they can approve it in person
- Move money between accounts held with the same bank, provided they are in your name only and not joint accounts.
On the other hand, a third party mandate usually won’t enable you to:
- Set up standing orders or Direct Debits
- Close the account or open new ones
- Cancel a card
- Change personal details (address, phone number, etc.)
- Apply for a loan, overdraft, or credit card
- Move money into an account owned by anyone else (even if you hold the account jointly with them)
- Move money into accounts held with other banks.
Some banks will only allow you to set up a third party mandate for a maximum of 12 months, after which they may recommend that you set up a Power of Attorney instead. However, a third party mandate can still be a good option if you need access to an account while you wait for Power of Attorney to be approved, as this can be a rather lengthy process.
How do I set up a third party mandate?
Setting up a third party mandate is usually fairly straightforward. You can obtain the relevant forms from your bank branch or sometimes print them out from the bank’s website and send them in the post if you prefer.
If you’re going to be the third party with access to the account, you’ll need to provide some of your own details as well, so have identification and proof of address to hand.
Remember that a third party mandate only applies to the bank you set it up with, so if the person you care for uses multiple banks, you may need to set up more than one mandate with them, or see if they can consolidate their finances.
Setting up a joint account
A joint account can be a convenient solution if you and the person you care for would prefer you to have more control over their finances than a third party mandate allows.
Setting up a joint account with someone doesn’t mean they need to put all of their money into it and use it as their primary account. They could, for instance, set up a joint account with you as a secondary account and pay a certain amount into it from their main one, possibly on a monthly basis as a standing order.
If you have a friend or relative who is thinking of setting up a joint account with someone else to manage their finances while they are in care, make sure that the person is trustworthy, as it being a joint account gives the person equal control over what happens to the money.
Bear in mind, of course, that if you open a joint account with someone and go overdrawn you are both liable for this debt.
Using a prepaid card
If your friend or relative has a live-in carer who looks after them, it may be convenient for the carer to have a certain amount of access to their finances, if – for example – they need to buy groceries or pick up a prescription for them.
In this case, and provided they are able to, the person in care can set up a prepaid card with their bank. This allows them to load a certain amount of money onto the card and give it to their carer to use. Bear in mind that prepaid cards usually come with charges, so ideally they will want one that doesn’t have fees for each use.
Setting up a Power of Attorney
Setting up a Power of Attorney is a way for a person to give you control of their finances on either a temporary or potentially permanent basis. They must have mental capacity when they create one.
The first kind of Power of Attorney is an Ordinary Power of Attorney (OPA), also sometimes called a Temporary of Attorney. This gives you permission to manage someone’s money for a set period of time or even for a single specific transaction. Remember that an OPA becomes invalid if the person loses mental capacity, so it is usually best utilised as a short term solution.
The second kind is a Lasting Power of Attorney (LPA), which tends to be more suitable for long-term arrangements. This gives you permission to manage someone’s money after they either lose mental capacity, or before this if they agree to it. After an LPA kicks in, it goes on indefinitely.
A Lasting Power of Attorney can also be arranged to give you the ability to make decisions about the person’s medical care and treatment, should they lose the capacity to make these decisions themselves.
You can read more in our article What is a Lasting Power of Attorney and why do you need one?
Stay alert to scams
It’s increasingly important to be aware of the common scams that fraudsters use, as these can be particularly devastating for those in a vulnerable position.
Make sure the person you are caring for is aware of the kind of scam messages they might receive, such as suspicious texts claiming to be from a family member or urging immediate financial action. Read more about these in our article Latest scams to watch out for in 2024.
If you’re not certain whether something is a scam or not, you may want to consider signing up to Ask Silver, a free AI-powered scam checking tool designed to help you spot scams. You simply snap a photo or screenshot of any email, website, or leaflet you’re worried about and send it to Silver on WhatsApp. Silver uses the power of artificial intelligence (AI) to spot any red flags and provides suggestions for next steps on staying safe, and if a scam is identified, you can ask Silver to report the scam to relevant agencies on your behalf.
Read more
If you have a loved one who needs care and aren’t sure on the best way to help them manage their finances, you can read our article How to pay for long-term care for some guidance.
If you are receiving care yourself and are still figuring out how to take care of your finances, our article How to manage your money if you need care may provide some useful advice.
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