Managing Your Aging Parent’s Finances: What to Do When a Parent Needs Financial Help
No one likes to lose control. For many seniors, financial independence serves as an incredibly powerful source of pride and identity. Unfortunately, however, taking over an elderly parent’s finances may become necessary as they age. This is especially true if they come to require long-term care or begin to develop custodial or medical needs that can only be handled by a nursing home or assisted living facility.
As we age, many of us can become less aware of the world around us and more dependent on others for assistance. This means that the day may come when your parent can no longer juggle their own financial obligations. When this happens, it can be extremely difficult for them to ask for help, even if they desperately need it.
Some common signs that may indicate your elderly parents need help with finances include:
- Unusual Purchases – Stay vigilant over the objects your parents have been buying or the services they’ve been spending their money on. If they suddenly begin to purchase things that don’t really fit their needs or lifestyle, it might be time to step in.
- Unopened Bills or Collections Notices – A pileup of financial mail can often spell bad news when it comes to money management. If your parents have unopened credit card or utility bills, or large piles of sweepstakes mail, it may be beneficial to sit down with them to talk.
- Expressing Distress of Financial Concerns – Some people will indirectly express their need for help by making vague statements about their lack of necessary funds for utilities and services or by avoiding certain important activities that they feel may set them back financially. Often, money is a common topic to vent about, but if your parent only talks about financial struggles when you are around, this could be a sign of a deeper problem.
- Physical Setbacks and Memory Challenges – Common conditions that often plague older individuals, including poor vision and hearing, waning reflexes, and cognitive struggles, can often be an underlying sign that your parent needs assistance with their daily activities, including banking, grocery shopping, and managing their healthcare.
How do I talk to my aging parents about legally controlling their finances?
For many, having “the talk” with your parents about their finances can feel overwhelming and nerve-wracking. Still, professional financial planners are quick to highlight the importance of older adults discussing finances with their adult children. In relation, adult children should be ready to broach the subject of possibly taking over elderly parents’ finances as well.
“For a lot of people talking about money is taboo, and so there just isn’t a comfort level there,” says Brooke May, partner at Evans May Wealth in Indianapolis, Indiana. “It’s not a good thing to not discuss finances with your adult children. At any point in time, something could happen, and you want someone to be able to step in…”
Keep in mind that taking over an elderly parent’s finances can be an extremely sensitive topic. That said, with an equally sensitive approach, you can work alongside your parents gradually in an effort to make the process as comfortable as possible for both of you.
What steps can I take to make this transition easier for my parent?
Start the Conversation Early
Even if you foresee it being some time before you may have to step in to legally control parent’s finances, it’s important to start talking about it now. The best way to start is by sitting down with your parents to discuss who will handle their personal and financial affairs when the time comes.
The National Institute on Aging recommends that parents give pre-written consent to a designated adult child or other family member that will allow that person to discuss a parent’s personal affairs with doctors, financial representatives, and SSI and Medicare officials. Without this type of planning, privacy laws may prevent important conversations.
Start With Gradual Changes
Even if it becomes necessary to assume legal control of your parents finances, you should never jump in with both feet right away. Instead of charging headstrong to take financial control from your parents, you must increase your support little by little only if and when the urgent need is apparent.
For example, if you have begun taking responsibility for writing and balancing their checkbook, you should start by doing this together. This type of personal, gradual approach is vital to the development of trust and comfortability with these new arrangements.
Keep Your Documents in Order
Sometimes, there can be a lot of legal red tape involved with managing your aging parent’s finances. For this reason, you are strongly encouraged to make a list of your parent’s important contacts, account numbers, and the places they store legal documents such as a living will or power of attorney.
In addition, be sure to double-check that everything your parent has is still valid and up-to-date, and that all their accounts are in good standing. Whether you are compiling this information yourself or simply keeping inventory, be sure that any sensitive information is stored safely and securely as well.
Simplify Bills and Take on Smaller Financial Tasks
Once everything is accounted for and organized, you can begin to take a closer look at your parents income, retirement, and savings, and sign them up for direct deposit if possible. Doing this will ensure that your parent has necessary funds available for their daily costs of living or any emergencies that may arise.
Furthermore, if your parent finds that paying bills is stressful for them, you may also consider signing them up for automatic withdrawals for important utilities like rent or mortgage payments, phone and internet bills, electricity, water, sewer, and trash.
Whatever you do, make sure that you are keeping a close watch on your parent’s transactional history, and ensure their income and expenses are budgeted accordingly.
Never Stop Communicating
Perhaps the most important aspect of taking over your elderly parent’s finances is to keep your loved ones fully informed about what’s going on. This includes not only the parents that you are caring for, but also siblings, aunts, uncles, and other close relatives.
Not only can this help you and your relatives offer one another an important source of support, it can also eliminate confusion or conflict that may arise. Although managing your aging parent’s finances can be a lot of work, you never have to do it alone.