Talking to your family about money in later life – your savings, how they’re managed, and what should happen if you’re no longer able to manage them yourself – is one of the most important conversations you can have. It’s also one many people put off.
There’s rarely a perfect moment. But having these conversations before they’re needed means fewer difficult decisions made under pressure, and more certainty for the people you care about.
This guide covers the four areas that matter most: passing on your savings, setting up a Lasting Power of Attorney, managing money day to day as you get older, and planning ahead for care costs. Knowing the basics makes starting the conversation much easier.
Inheritance tax (IHT) is charged at 40% on the value of an estate above a certain threshold.
Each person has a nil-rate band of £325,000. If you leave your home to direct descendants (children, stepchildren, grandchildren), an additional residence nil-rate band of £175,000 applies – taking your personal threshold to £500,000. For married couples and civil partners, unused allowances transfer to the surviving spouse, meaning a couple can potentially pass on up to £1,000,000 before IHT becomes due.
Both allowances are currently frozen until 2030/31. If your estate is above £2 million, the residence nil-rate band starts to taper away.
Transfers between spouses and civil partners are fully exempt from IHT – during life and on death.
All savings accounts, fixed-term deposits, ISAs, and cash deposits form part of your estate when you die. ISAs lose their tax-free status on death, though a surviving spouse receives an extra allowance (called an Additional Permitted Subscription) equal to the ISA’s value.
Premium Bonds and NS&I products are included too. Joint bank accounts generally pass automatically to the surviving account holder, but HMRC will still assess who contributed what for IHT purposes.
You can give away up to £3,000 per year free of IHT, with any unused allowance carried forward one year. Small gifts of up to £250 per person per year are also exempt, with no limit on the number of recipients.
Larger gifts are called Potentially Exempt Transfers. If you survive seven years after making the gift, no IHT applies. If you don’t, the tax is calculated on a sliding scale.
There’s also a less well-known exemption called normal expenditure out of income. If you make regular gifts from income – not capital – that form a habitual pattern and don’t affect your standard of living, those gifts are immediately exempt from IHT with no seven-year wait required. Regular payments into a grandchild’s Junior ISA, for example, could qualify. Keep thorough records.
From April 2027, most unused pension funds will be brought into estates for IHT purposes. This is now confirmed law, having been introduced in March 2026 as part of the Finance Act 2026. It’s a significant shift for anyone who has deliberately kept pension savings untouched as an inheritance strategy. If this affects you, a conversation with a qualified financial adviser is worth having to understand its impact sooner rather than later.
If you already have a will, it’s worth checking it still reflects your wishes – especially after a major life change. If you don’t, intestacy rules apply by default, and the outcome may surprise you. An unmarried partner, for example, receives nothing under intestacy rules regardless of how long you’ve been together.
It’s also worth keeping a record of all your accounts, policies, and financial arrangements in one document – and letting someone you trust know where it is. Age UK’s free LifeBook tool is designed exactly for this purpose.
A Lasting Power of Attorney (LPA) is a legal document that lets you choose someone to make decisions on your behalf – either now, or if you can no longer make decisions yourself.
There are two types:
You can have one or both. Most people appoint a close family member or trusted friend as their attorney, though you can appoint more than one.
If you lose mental capacity without an LPA in place, no one – not your spouse, not your children – has automatic legal authority to manage your finances. Banks can restrict accounts in these circumstances, even joint ones – meaning no one can pay bills, access savings, or manage day-to-day money until a court order is obtained.
The alternative is applying to the Court of Protection for a deputyship order. This is expensive (costs can easily reach £2,000–£3,000 or more in the first year), takes several months to arrange, and means nobody can access your money in the meantime – for bills, care costs, or day-to-day expenses.
By contrast, an LPA costs £92 per document (£184 for both types) and takes approximately 20 weeks to register with the Office of the Public Guardian.
There’s no perfect time, but earlier is generally easier. Making an LPA requires mental capacity – so it’s worth thinking about before a health change makes it more complicated.
You can create an LPA online via the GOV.UK website or on paper. Once signed in the correct order – donor first (the person granting the power), then the certificate provider (an independent person confirming you understand the document and aren’t being pressured), then your attorneys – you submit it to the Office of the Public Guardian for registration.
Once registered, tell your bank. Most banks now accept the OPG’s digital service, which lets attorneys share secure access to LPA details without needing to produce the original document every time.
The best financial conversations happen before there’s a problem. And they tend to go better when they’re framed as planning together – not one person taking over from another.
A natural way in: share your own arrangements first. If you’ve just updated your will, or set up an LPA, saying so can open the door. It signals that this isn’t a conversation about declining health – it’s just good planning.
Signs that more day-to-day help might be needed include missed payments, unopened bills, unusual spending, confusion over finances, or increased anxiety about money. These are worth addressing gently, not urgently.
One of the most useful things a family can do is compile a single document covering:
Keep a physical copy somewhere secure. If passwords or online banking credentials are included, use a reputable password manager rather than writing them down in full – and never share banking PINs directly, as this breaches bank terms and removes fraud protection.
Financial fraud in the UK is a significant and growing problem. According to UK Finance’s Annual Fraud Report 2025, total losses reached £1.17 billion in 2024. Common types include impersonation fraud (criminals posing as banks, HMRC, or the police), investment scams, and increasingly sophisticated phone and text-based approaches.
A few things worth knowing:
If you’re helping a parent with online banking, do it with them rather than for them where possible – it helps them stay informed and reduces the risk of accidental fraud.
If someone needs practical help with day-to-day banking while they still have full capacity, a third-party mandate lets a named person carry out basic transactions on an account. It’s usually straightforward to arrange with your bank and costs nothing.
However, it only covers that one bank, usually has a daily withdrawal limit, and stops being valid if the account holder loses mental capacity. It’s a useful short-term measure, but not a substitute for an LPA.
Care in England is subject to a means test. The key thresholds for 2025/26 are:
These thresholds have been frozen since 2010. The previously announced reforms – including a lifetime cap on care costs of £86,000 – were cancelled in 2024 and are not going ahead.
The means test includes all savings accounts, cash deposits, ISAs, Premium Bonds, investments, and (in most cases) property. Your main home is not included in the means test for home care. For residential care, it is included – but is disregarded if your spouse or civil partner still lives there, if a relative aged 60 or over lives there, or for the first 12 weeks after you move into permanent residential care.
Your pension income counts as income for the means test. Undrawn pension pots may also be assessed.
Self-funders typically pay more than local authority-funded residents. According to Which? and care marketplace Lottie, average weekly costs for self-funders in England are broadly:
Costs vary significantly by region – from around £1,095 a week in the North East to £1,456 in London for residential care. The average care home stay is around two to two-and-a-half years, though a significant proportion of people stay longer. Total care costs of £130,000–£200,000 are not unusual for self-funders.
Figures based on Which? (March 2025), Lottie (January 2026), and the Homecare Association Minimum Price for Homecare 2025/26. Costs vary by location, provider, and level of care required.
Attendance Allowance is a tax-free, non-means-tested benefit for people over State Pension age who need help with personal care due to illness or disability. The current 2026/27 rates are £76.70 per week (lower rate) and £114.60 per week (higher rate). It doesn’t affect most other benefits – and can actually increase entitlement to Pension Credit and Housing Benefit. It’s claimed separately from any care funding assessment.
NHS Continuing Healthcare provides fully funded care for those whose primary need is health-related, with no means test applied. Eligibility is assessed on the nature, complexity, intensity, and unpredictability of health needs. A fast-track process exists for those nearing end of life.
Deferred Payment Agreements allow you to use the equity in your home to pay for care without selling immediately. The council pays the care home and registers a legal charge on the property, which is repaid when the property is eventually sold or from the estate.
If someone transfers assets – giving money to family, for example – with the intention of reducing what’s assessed in a care means test, the local authority can treat them as still owning those assets. This is called deprivation of assets.
There is no fixed time limit. Councils can look back as far as they consider relevant – the test is whether someone knew, or could reasonably have expected, that they would need care when they made the transfer. Genuine spending on everyday living, gifts made long before any care need was foreseeable, and reasonable purchases are not deprivation.
If your capital is approaching £23,250, it may be worth requesting a financial reassessment from your local authority. Once your capital drops below the upper threshold, the council may begin contributing to care costs – though the timing and process can vary. It’s worth checking with your local authority whether a reassessment needs to be actively requested, as this isn’t always made clear upfront.
These conversations touch on areas – tax, legal documents, care funding – where getting qualified advice can make a real difference.
This guide is intended as general information only. It does not constitute financial, legal, or tax advice. Tax treatment depends on your personal circumstances and is subject to change in the future. For guidance specific to your circumstances, please speak to a qualified financial adviser, solicitor, or later-life specialist.
Figures and thresholds are correct as of April 2026 and are subject to change. OakNorth Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. FSCS protection on eligible deposits up to £120,000