Disclosure Statement: Durand Financial Services Pty Ltd and its advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. General Advice Warning: The information contained within this website does not consider your personal circumstances and is of a general nature only. You should not act on it without first obtaining professional financial advice specific to your circumstances.
Helping family and friends with their money decisions
5 WAYS YOU CAN HELP:
Many people don’t like to talk about money, or admit if they’re struggling with their finances. In particular, older people might worry about losing their independence, or fear they’ll become a burden if they need help to make financial decisions. But, if someone you care about needs help, you should start the conversation now. The longer you put it off, the more difficult it will be – especially if they become ill.
When it comes to discussing someone else’s finances, it’s important to remain unbiased and non-judgmental. Here are some tips:
- Keep it relevant: Only ask for the information you need to know to work out how to help them. Avoid prying into irrelevant personal details.
- Encourage open discussion: Ask them about their plans for the future, and any concerns they have. For example, they might worry that they will not be able to afford aged care. This will help you work out where to start looking for the information they need.
- Share your own concerns: Explain why it’s important to have this conversation with them. For example, you could explain that, if their health deteriorated or anything happened to them, someone would have to make decisions on their behalf. Without pressuring them to nominate anyone in particular, you could suggest they think about who they would want to make medical or financial decisions for them, if they could not do it for themselves.
An important step towards supporting your relative or friend to make good financial decisions is to get a clear picture of where they stand right now. This involves working out what assets and liabilities they have, and where their legal and financial paperwork is.
Here are some things you can suggest they do:
- Take stock of their current financial position: Use the net worth calculator to help work out the total value of their assets and debts.
- List their important documents: Suggest that they make a list of their important documents, including their birth and marriage certificate, will, enduring power of attorney, advance healthcare directive, house deeds and bank account details.
- Store important documents securely: Encourage them to keep these documents in a secure location – either in a locked filing cabinet or a secure data file. Only the person they nominate to manage their estate should have access to these files.
No-one wants to think about the prospect of dying, or a time when they can no longer make decisions for themselves. But, if the person you care about dies without a valid will, or if they lose the capacity to manage their own affairs without appointing someone to do this for them, decisions might be made on their behalf that they would not have wanted.
Ensure they have a current will
If the person you are supporting does not have a will, they should arrange to get one. A will sets out what they want to happen to their assets – such as money, property and jewellery – when they die. It can also set out instructions for their funeral.
If they have a will, but it hasn’t been updated in a while, encourage them to take another look at it. They may need to update it if there have been any major changes in their life, such as the death of their partner or any beneficiaries, new children or grandchildren, or if they have purchased or sold any property.
Our wills and powers of attorney webpage has information on how to prepare a will.
Appoint a power of attorney
By appointing someone to be their power of attorney, your loved one will be giving that person the legal authority to look after their affairs.
The states and territories differ in terms of what a power of attorney can do, so it’s best to check with your local Public Trustee. However, the three main types of powers of attorney are:
- General power of attorney: You appoint someone to make financial and legal decisions for you, usually for a specified period of time – for example, if you’re overseas and unable to manage your legal affairs at home. This power becomes invalid if you lose the capacity to make decisions for yourself.
- Enduring power of attorney: You appoint a person to make financial and legal decisions for you if you lose the capacity to make your own decisions.
- Medical power of attorney: This person can make only medical decisions on your behalf if you become unable to do so yourself.
Encourage your relative or friend to think carefully about who is the right person (or people, as they can appoint more than one) to be their power of attorney. They need to be trustworthy, reliable, able to act in your loved one’s best interests, and have the skills to manage their finances.
To ensure that everyone knows and understands their wishes, it might be best for your loved one to discuss their decision with their family. This will also help avoid surprises and disputes later on.
Financial advice can help clarify financial goals and create a plan to achieve them. Different types of financial advice options are available to suit different personal circumstances. There are many things to consider when choosing and working with a financial adviser.
Free money seminars
The Department of Human Services’ Financial Information Service (FIS) offers free money seminars all over Australia on a variety of topics, including: Understanding retirement income streams, Planning for residential care, Estate planning for older Australians, and Understanding your pension.
FIS officers can also give information over the phone or at personal interviews.
Find out more at the Department of Human Services’ website.
Above all, remember that there are lots of free resources available to help you navigate the issues that affect senior Australians. Be sure to make use of their services – there’s no need to do it all yourself.
General seniors support
Our elder care and seniors support webpage has a list of national, state and territory organisations that can help seniors and their families deal with a wide range of issues that affect older people.
Encourage your friend or family member to talk to a financial counsellor if they have money worries. Financial counselling is free, confidential and independent.
You can contact a financial counsellor by calling the National Debt Helpline on 1800 007 007 between 9.30am and 4.00pm, Monday to Friday; or by visiting the National Debt Helpline website.
You could also use our financial counsellor map to find a counsellor near you.
Free legal advice
If your friend or relative is in debt and cannot afford a solicitor, they can contact a community legal centre or Legal Aid agency in their state or territory for free legal advice. You will find a list of these, and contact details, on our free legal advice webpage.
Use ASIC’s MoneySmart information, tools and resources to help seniors make better financial decisions for their future.