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How to Take Over Elderly Parents’ Finances

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How to Take Over Elderly Parents' Finances

April 11, 2019

Seniors face many unique issues related to managing their finances, including:

  • Changes in income and expenses related to retirement and increasing healthcare costs
  • Physical and mental effects of aging, such as limited mobility, memory loss and dementia
  • Being targeting by people who commit financial abuse

Older Woman holding piggy bank

As a caregiver to an elderly parent, you may have to take over management of their finances one day. Here’s how to prepare for this responsibility: 

Have the Conversation Before It’s Needed

According to Ameriprise Financial, 90 percent of adult children who have talked about estate planning with their parents say a life-altering event prompted the discussion. But ideally, these conversations should take place BEFORE those events, not after. Plan to have this first conversation when your parents are in their 60s, and to talk about money regularly thereafter.

Your parents may feel like even talking about the possibility of a time when they can’t handle their finances threatens their independence. But being prepared for something doesn’t mean that thing will happen. It just means that if it does happen, you’ll be ready with a plan that lays out who will manage their assets, what those assets are, how to access those assets and what your parents’ priorities are for those assets. 
It’s common not to know how to talk to aging parents about finances. Here are some tips:
  • Keep the conversation positive – make it about ensuring they have a safe, secure future, not about fears they may have about losing their independence.
  • To make the conversation feel less intimidating, talk to your parent one-on-one or with a small group of close family.
  • Emphasize that you want to help them, not control them.

Know What Financial Assets and Documents You’ll Need Access To

When you talk to your parents about their finances, ask them to tell you about the following assets and documents (and how you can access them):
  • Bank accounts
  • Investment accounts
  • Credit cards
  • Mortgages and other loans or debts
  • Utilities and other monthly bills
  • Insurance policies
  • Social Security statements and Social Security benefit verification letters
  • Tax returns 
  • Vehicle titles and property deeds
  • Birth certificates and marriage licenses
  • Wills
  • Powers of attorney

If your parent doesn’t have a will or has one but hasn’t looked at it in years, encourage them to create one or update their existing one. If they don’t have a power of attorney, work with them and with a lawyer to create one. A financial power of attorney allows your parent to give you or another trusted person permission to make financial decisions on their behalf. The power of attorney can go into effect at the time it’s signed or in the future at such time that your parent becomes unable to make their own financial decisions. Seniors must be “of sound mind” to grant a power of attorney, so it’s important to look into creating this document before dementia or other debilitating health conditions strike.

Learn more about securing financial power of attorney.

Know the Signs that Your Parent Needs Help

Financial issues are often an early sign of memory loss and dementia, including Alzheimer’s disease. Watch out for warning signs that your parent is having trouble managing their money, such as:
  • Bills going unpaid
  • Checks bouncing
  • Creditors calling
  • Changes in their purchasing habits or lifestyle
  • Gifts being made to people or organizations you haven’t heard your parent talk about before

If you believe your parent shouldn’t be managing their finances on their own anymore, talk to them about it and ask them to put their financial power of attorney into effect if it isn’t already. Alternatively, the power of attorney goes into effect automatically if a doctor certifies that your parent is incapacitated. Then it will be your duty to pay your parent’s bills, file their taxes, manage their property and take on other financial responsibilities on their behalf.

You can manage your parents’ affairs yourself if you feel confident doing so. But elderly parents’ finances are often complex and may involve situations you haven’t encountered before, so don’t hesitate to hire a financial planner if you want help.

By learning how to talk to aging parents about finances while they’re still able to manage their own money, finding out what financial assets and documents you’ll need access to and knowing the signs that they need help, you’ll be ready to make sure your parents are financially secure for the rest of their lives. 

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