Taking over your parents’ finances is one of the most important responsibilities family caregivers can be faced with. And unless you’re a certified CPA, it can be overwhelming, too. While we all think of evil-minded phone solicitors being the culprit of senior financial issues, sometimes it is simply their own inability to maintain this task that derails their financial security. Keeping up with finances is a task that becomes easily daunting as we age. This includes paying bills, monitoring investments, monitoring spending and balances, paying taxes and even making sure we don’t fall prey to those solicitor scams. Most seniors have a nest egg that needs to last and/or a fixed income that needs to cover monthly expenses, so keeping finances in check is critical. Here are some tips to help you start navigating this new world.
DO start early.
The best time to have a conversation with parents about setting up a Power of Attorney is before it’s needed or before something happens that could be detrimental to their financial well-being. This way you’ll have a good understanding of the depth of financial management necessary and help them protect their nest egg.
DO get the proper authority.
Whether you start early or not, it’s important to get legal authority to handle their finances. Setting up someone you trust (usually a family member) as the fiduciary, or Power of Attorney, will give the assigned person legal access and accountability for the senior’s financial management. If your parent is no longer able to understand what he/she is signing then you’ll need to work with an attorney to gain guardianship or conservatorship. This can be much more time consuming and costly, which is why it’s good to have these conversations earlier in the aging process.
DO an audit of all accounts.
The first step would be to familiarize yourself with all of their financial dealings including investments, retirement accounts, savings, income, spending habits, subscriptions, recurring bills, outstanding loans, etc. Look through their checking or debit account to see where there might be auto-payments. Contact any financial planners or CPAs they work with to get recent statements and notify of the change. You may even check their credit report to make sure there are no red flags based on their social security number.
DO get organized.
Once you have everything gathered, it’s time to get organized! Set up a system that works for you and, if they are capable, keep your loved one in the loop on where they stand financially. Cancel expenses that are unnecessary, set up auto-pay where possible and set a regular time to sit and review monthly or quarterly finances.
DO seek professionals if necessary
While keeping track of a simple checking account may not seem too hard, you may want to seek professional advice on investments, retirement accounts and other areas of finances you’re not familiar with. In the end, it will be worth the expenditure to be sure you’re making their money go further and helping them use it to their benefit.
DO create a budget.
Once you’ve gotten advice and feel good about where things stand, it’s recommended to sit with them and create a budget which takes into consideration their lifestyle and possibilities for future care needs.
DON’T leave them out of the process.
Depending on your situation, and out of respect, it’s important to include them in the process as much as possible. Remind them you are doing this to ease their burden and worry. However, if you are dealing with Alzheimer’s/dementia, be sure you have the right authority to be making these important decisions on their behalf.
DON’T select people they don’t trust.
Whether it’s a certain family member or a professional, be sure to seek the advice and help of people they would trust. This is just a given.
DON’T fight over inheritance
Taking over your parents’ finances can sometimes ignite heated debates within the family. If you have siblings or close extended family, have a discussion together and agree keep your parents best interest in mind and not squabble over possible inheritance. Remember these are your loved ones and their money should be used for THEIR quality of life now, not yours later.
DON’T try and go it alone.
Seek help when you need it from other family members and trusted friends and professionals. Finances can get complicated so don’t be afraid to get a second opinion.
DON’T overwhelm them with details.
Again, depending on your situation, you may want to simplify your communication about financial dealings. If there are too many details they don’t understand it could cause unnecessary worry and anxiety.
DON’T keep them from enjoying their money.
If you are afraid they will “run out” then seek the guidance of a financial professional. They deserve to use the money they have saved and earned to live life to the fullest and treat themselves if possible.
At the end of the day, taking over your parents’ finances is an important responsibility. Our experience is that finances are typically a task the family would prefer to handle while letting a home care resource like The Nursing Team help with other lifestyle tasks including meal preparation, daily hygiene, medication management and more.
Don’t hesitate to call us if we can be of any assistance while navigating this transition, In the meantime, here are some additional links to help you along the way.
AARP has a great article HERE about this topic.
A simple explanation of Powers of Attorney are explained HERE.
Some guidance on creating a budget is HERE.
