The NHS provide four broad categories and below are financial tips for each from Quilter tax and financial planning expert, Rachael Griffin.
33% of carers are looking after a parent. These people might want to consider the following financial planning points:
It is imperative that a parent sets up their PoA as early as possibly to give them control over who becomes their main carer in the event they can no longer look after themselves. Failing to set up a PoA can add an extra layer of difficulty to the caring process as if you don’t the Court of Protection will have to appoint a deputy on the person’s behalf who may not necessarily have been their first choice when they had the capacity to make the decision. While a deputy and PoA essentially have the same job with same duties, crucially a deputy will be heavily scrutinised and supervised by the Office of the Public Guardian (OPG) for the duration they care for someone.
It’s important to ensure that a will is in place for a parent before their health starts to deteriorate so it is less likely to be challenged in court and cause delays at an already difficult time for a family. Similarly, just the process of writing a will can be a useful process for analysing a person’s estate and working out whether there are any inheritance tax mitigating steps that could be taking to reduce someone’s liabilities. They are also important for providing clarity over which family members get heirlooms and personal possessions. You may also find that there is some extra funds available which might be able be used to pay for any extra care costs.
26% are looking after a spouse. These people might want to consider the following financial planning points:
Typically a carer will seem like the protective force in this kind of relationship; however it is important that they themselves also take out a protection policy. This is particularly important for full-time carers who might have left the workplace to take on caring duties but in doing so also left behind any employee benefits, such as protection. If someone is caring for their husband or wife and then falls ill it can leave the pair in a very difficult position having to not only cope with the lack of earnings but also the need to pay for additional care.
If you are looking after a spouse who might be suffering from declining mental or physical health it is sensible to make sure that you have a will in place, which makes sure that they are left the right level of funds that they might need for additional care if possible. Wills are also important documents for providing guidance on who someone would like to take on caring responsibilities for dependent children. If a couple has young children but one half of the couple is too unwell to care for the children, it is worth spelling out in a will who would be best placed to take on the child care.
While carers may often put the person they are caring for first, it is crucial not to forget that at some point you are going to need some retirement provision. Importantly, full-time carers who have left work to take on caring duties should if possible continue to regularly contribute to a pension or make sure they have some provision for retirement.
13% are caring for a child that requires special care. These people might want to consider the following financial planning points:
If you are caring for a child that will never be able to look after themselves it is a good idea to think about setting a up a trust for them. Depending on the type of trust you choose to us, this type of financial tool can enable you to decide how assets within the trust are distributed and to whom even after you die.
Depending on circumstance it may also be useful to think about whether it is a good idea to start gifting through a child’s lifetime so that they have the maximum funds available for their caring needs later in life when you may not be around to give it to them.
Friend, neighbour or non-immediate relatives
9% are caring for a neighbour or non-immediate relative. These people might want to consider the following financial planning points:
It is important to have a clear defined role when it comes to providing care to a friend or loved one. Often caring needs start to increase over time and people are quickly overwhelmed with needing to juggle their own commitments and helping those around them. If you are taking on the role of main carer for someone you need to be aware of the financial impact that might make and also be clear on whether you will get any support from other relatives or friends. Additionally, it is worth exploring whether it is worth you being named as their PoA to avoid any additional difficulties in you being able to provide care to them further down the line.
Often vulnerable people might need help sorting out aspects of their financial life. This could involve helping someone deal with online banking, making calls to providers or processing sensitive financial statements. Performing any one of these tasks could mean that personal data is disclosed to the carer, and if that then gets into the wrong hands it could be used to scam the vulnerable person and leave the carer in a difficult legal position. It is therefore essential that if a carer is required to perform any task like this they seek PoA or a third party mandate from a provider, which enables them to help.