Managing someone else’s money – advice for family and carers

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If you’re caring for someone else, how can you help them with their money and can you use their bank account?

Managing someone else’s money

If you’re looking after someone and you do things like go shopping for them, or pay their bills, how can you do this? Some people give their carers their PINs so they can take cash out for them or even pay bills online. But it’s not a very secure option. If there’s any fraud on the account, the bank is unlikely to refund the money that’s been stolen.

SAVVY TIP: Barclays is due to launch a debit card specifically for carers, but it says it’s not able to give details about this card at the moment.

Third party mandate

This gives someone else (the ‘third party’) permission to spend money via your account. You can limit what they can do and, in any event, they should not be able to close your account, open other accounts in your name or arrange an overdraft. You can only set up a third party mandate while you have mental capacity, that is to say, while you understand what you’re doing and the consequences of doing it.

SAVVY TIP: Banks should offer this option, but if you’re thinking of switching banks, check that they will let you open a third party mandate before you switch.

How to set up a third party mandate

There are only a couple of steps to setting up a third party mandate and they should be straightforward:

  1. Complete the form: You can normally complete the forms for a third party mandate in a bank branch or you can download the forms and send them back by post. If it’s a joint account, both account holders would have to sign the form to say they agree to the third party mandate being set up.
  2. Get your carer/family member/neighbour (the third party) to provide the bank with ID details. This normally means a passport and a council tax or utility bill.

Joint account

This may be useful if, for example, a close family member helps you with your money and you are comfortable giving them complete access to your account. However, it is worth saying that you are each liable for the whole of any debt that’s run up on the account (in the jargon it’s called ‘joint and several liability’) and money in the account belongs to each of you equally.

A second account

A safer option is to open a second account (as a joint account), that you pay a limited amount of money into – namely, money that you’re happy for them to spend. If you set limits on that account, so that your family member or carer can’t set up an overdraft etc, you can limit any financial exposure you have. You can still link it to your main account so that you can feed money into this second account, as and when you need. However, if you are unable to do your own banking, this won’t be a practical option.

Post Office card account

If you don’t have a bank account, or if you prefer a separate account for your state pension or benefits, you can open a Post Office card account. This account lets you have a second card for someone else. The account doesn’t have an overdraft facility so there’s no danger of the second card holder going overdrawn.

Prepaid card

You can open a prepaid card account and give that to a carer to use. They will only be able to spend the money you’ve loaded onto the account. Most prepaid cards come with charges so check that you won’t be charged every time your carer uses it or, if it’s for infrequent use, that you won’t be charged what’s called an ‘inactivity fee’.

Power of attorney

There are two different types of power of attorney. The first one is a temporary power of attorney. That means you give someone permission to manage your money for a set period or for a specific transaction. You can’t use this if you don’t have the mental capacity to understand what you’re agreeing to. If you’ve set one up, it becomes invalid if you lose mental capacity.

SAVVY TIP: A power of attorney gives someone the legal authority to act on your behalf. However, you can limit what someone is able to do.

An ongoing power of attorney is something you set up while you have the mental capacity to know what you’re agreeing to, but it doesn’t kick in until you lose that ability. Once it’s activated, it lasts forever.

Useful links:

You can read more about how to pay in a guide called Difficulties making payments, from the website PayYourWay.

Related articles:

Understanding ongoing powers of attorney; what happens if you cannot make decisions about yourself.

Looking after the finances of an elderly relative as a deputy; what does the Court of Protection do?

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