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Give some thought to your declining years
You should consider appointing someone to handle your finances in case you lose the capacity to do so, says Ruth Jackson.
You should consider appointing someone to handle your finances in case you lose the capacity to do so.
Many of us have made financial plans for our later years, including saving into a pension, drawing up funeral arrangements, grappling with inheritance-tax planning, or setting aside money to cover long-term care costs. But we're less likely to have thought about what happens if we no longer have the mental capacity to manage our own money.
Lasting powers of attorney (LPA) have become increasingly popular in recent years. There are two types: a health and welfare LPA, and a property and financial affairs one. The latter is a legal document allowing a chosen person to handle your finances if you are no longer able to do so.
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Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Setting up an LPA is a relatively simple process. First of all you need to decide who you want to nominate to look after your financial affairs, and whether you want them to take over immediately or only when you lose capacity. It costs £82 to register an LPA in England and Wales, £77 in Scotland, and £127 in Northern Ireland. Involve a solicitor in the process and you'll have to pay legal fees, but it is possible to set up an LPA yourself. (See consumer site MoneySavingExpert.com for a guide.)
Once you have an LPA in place, the person you have chosen as your attorney has the power to make decisions about bills, savings and property, and they can manage your bank account and make financial gifts on your behalf. Note that you can set the exact parameters of the decisions the person can make.
If you don't have an LPA, and in the future your family or friends need to manage your finances for you, they will have to go to through a lengthy court process and pay £400-£900 plus legal fees. So plan ahead and register an LPA while you have the capacity to do so.
Choose carefully
As the number of LPAs has risen, so have instances of people abusing their power of attorney. Between April 2017 and March 2018, there were 1,729 inquiries into the actions of attorneys, compared with just 876 two years earlier, according to figures from the Ministry of Justice.
In some cases, attorneys have inadvertently breached rules by failing to keep a donor's money separate from theirs, for instance, or neglecting to keep records of transactions. However, there are unfortunately many cases where access to finances has been deliberately exploited.
In one case quoted in The Sunday Times a woman invested £87,000 of her aunt's money into a reptile-breeding business. The woman said she thought the investment would be in her aunt's best interests, as she had been fond of animals. Abuse of an LPA has also been highlighted recently by astronaut Buzz Aldrin, who is suing his children for abusing their power as legal guardians. The 88-year-old claims they improperly used his credit cards, assumed control of his memorabilia, and deliberately sabotaged his relationships.
So it's important to choose your attorney carefully, and explain to them exactly what is expected of them. You can have more than one person named on the LPA; it's common to have between one and four. This protects you if one dies, no longer wants the responsibility, or is abusing the position. It's also a good idea to involve your family in the process so they know what you are doing and who is going to be in charge of your finances.
Finally, if you already have an LPA and you registered it in England and Wales between 1 April 2013 and 31 March 2017, you are owed a refund of up to £54. The government has admitted people were overcharged during that period. Either the person covered by the LPA, or their attorney, can apply for the refund by contacting the Office of the Public Guardian on 0300 456 0300 or via their website found through Gov.uk.
Pocket money Britain's best and worst banks
More than £22m has been lost to rental fraud since April 2014, according to Action Fraud, the UK's fraud reporting centre. In just over 400 cases the victims lost £5,000 or more. The latest trend appears to be asking people to hand over a "viewing deposit", says Claer Barrett in the Financial Times. Barrett's stepson narrowly avoided sending the amount to a fraudster on the flat-share site SpareRoom who did not actually own the property (in which no room was in fact up for rent). SpareRoom warns flat hunters never to pay anything before viewing a room, and never to pay anything via anonymous money-transfer services. To check whether an account actually belongs to a money-transfer service, use an online sort-code checker.
More than half a million tourists made a travel-insurance claim last year at a rate of one a minute according to the Association of British Insurers. Yet securing a payout is not always easy, says Teresa Hunter in The Sunday Times. It helps to be aware of why your claim might be rejected.
Firstly, travel cover for your personal baggage and valuables can be poor, with claims subject to draconian deductions. Typically, overall cover is limited to £1,500 to £2,000. Some contracts allow precious items to be insured separately, but cap this at £250 to £300 for any single item.
Nearly nine out of ten travel policies impose a "wear and tear" deduction, with some imposing a 100% deduction on iPads and laptops over three years old, and on jewellery, sunglasses and prescription glasses over two and a half years old. Some policies will insist you produce original receipts for items you purchased, even if that was many years ago. Without a receipt, CheapTravel Insurance and Medisafe Insurance limit compensation to £50 per item and £150 overall. Finally, read the small print about what is excluded if you are deemed to have been drinking "excessively" before being injured.
RBS and Clydesdale have come joint bottom of the personal-banking league table, says Jill Treanor on the BBC. The Competition and Markets Authority has published these rankings for the first time in an effort to increase competition in the sector. Less than half of RBS's clients would recommend its customer service to their friends and family. First Direct, which is owned by HSBC, came top, with 85% of its customers satisfied.
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Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.
