Opening a Savings Account for Elderly Parent?

efunc

Hello,

my elderly mum has asked me to open a savings account for her so she can put some money away. However this is her first account and she has no credit cards or anything in her name. I've opened a 5-year fixed for her in the past, but all I did then was to open it myself in my name and just put her money in it for her.

My question is, can I open an ISA for her now, in my name, without it affecting my own ISA allowance for this year? Or will it have to be in her name, and if so, can she do it without any prior financial history?

Finally, since she's a pensioner, does she qualify for tax free savings anyway, ISA or no ISA? And again, if so, does this account have to be in her name, or can I open it for her?

thank you!

grizzly1911

efunc wrote: »

Hello,

my elderly mum has asked me to open a savings account for her so she can put some money away. However this is her first account and she has no credit cards or anything in her name. I've opened a 5-year fixed for her in the past, but all I did then was to open it myself in my name and just put her money in it for her.

My question is, can I open an ISA for her now, in my name, without it affecting my own ISA allowance for this year? Or will it have to be in her name, and if so, can she do it without any prior financial history?

Finally, since she's a pensioner, does she qualify for tax free savings anyway, ISA or no ISA? And again, if so, does this account have to be in her name, or can I open it for her?

thank you!

ISA stands for Individual Savings Account. It has to be opened buy the individual.

Savings accounts don't usually need financial history unless their was an obvious bad track record.

If your mothers total income, pensions and savings interest income, is below her current personal tax free allowance then she could complete HMRC Form R85 to request the savings institution to pay interest gross.

xylophone

but all I did then was to open it myself in my name and just put her money in it for her.

Not a wise decision - by doing this, the money became yours and had you died, would have fallen to be dealt with as part of your estate. Had your will not specified that the money should go to your mother, she could potentially have lost her life savings!

alanq

Don't assume that an ISA would be the best plan. If Mother's income (including pension) is low enough then there will be no tax to pay on all of/some of the interest in a normal savings account. Sometimes the gross rates on normal accounts are higher than for the corresponding ISA. Last year I discovered that my Mum's instant access ISA was earning less than the corresponding instant access account. Even if she had been paying 20% tax (which she wasn't) she would have at the time better off in the normal account than the ISA.
http://www.hmrc.gov.uk/rates/it.htm

As already pointed out it is very unwise to deposit funds for someone else in ones own name. Apart from the reasons already given a few more that come to mind are

• Ts&Cs will almost certainly require that you declare that it is you own money that you are depositing.
• If you become entitled to means tested benefits your mother's funds will count as yours and you may lose out.
• If mother becomes entitled to means tested benefits she may seem to be entitled to something that she is not. It may been conceived as an attempt to conceal assets (look up "deprivation of assets").

innovate

You should do it properly and get a Power Of Attorney, then you can open & operate accounts in her name officially, and everything is above board.

If she is a non-tax-payer (which doesn't automatically follow if she is a pensioner), an R85 form will ensure she gets paid the interest gross.

efunc

Thanks for all the advice. I'm talking fairly small sums of money here, but I'll investigate opening a normal savings account for her in her own name. She has no internet access and doesn't know how/want to operate an account, but I'll just oversee the process for her. Thanks again.

Mojisola

innovate wrote: »

You should do it properly and get a Power Of Attorney, then you can open & operate accounts in her name officially, and everything is above board.

It's well worth looking into POA. It can save a lot of time and money and anxiety in the future.