Managing finances can become more difficult as we age, which is why our parents and other loved ones may eventually need a helping hand. This conversation requires both a gentle approach and a plan. When helping or taking over your aging loved ones’ finances, the goal is all about avoiding any potential issues. Whether it’s tackling bills, protecting them from financial abuse, or advising them against large unplanned purchases — you’re there to make their life easier.
With that said, starting the conversation can often be the most difficult process. People don’t want to lose independence or feel like they need to be watched over. Here are some helpful tips to help your aging parent with their finances:
1. Be Their Partner
Helping someone with their finances means just that — helping. Identify how much assistance they’ll need and craft a plan accordingly. If they are still somewhat financially responsible, you need to respect their decisions and work with them — be their financial partner. There are certain circumstances where you will need to take over their finances completely, for example if they have a cognitive impairment or dementia. However, diagnosis or worsening cognitive states are not always the case.
Typically, you’ll need to guide their purchasing behavior, monthly bills, and safeguard them from scams or financial abuse. If all goes well, they’ll be appreciative of your efforts and willing to accept additional help when needed.
Regardless of their mental state, it’s important to work with them and respect their choices. Stay connected with other relatives who have good rapport with your aging loved one and coordinate. Having everyone on the same page cuts down on confusion and ensures your parent’s best interests are in mind. This leads to our next tip.
2. Inform Family Members
It can be difficult to know exactly when assistance will be needed regarding your parent or aging loved one’s financial abilities. It’s important to allow them to manage their own finances for as long as possible, but when it’s time to start helping or managing their money, you need the family on board.
Share your plan, information, and process with close family members so that they also can help and be in the loop. This will not only give you additional support, but it will also mitigate possible conflict. Taking over someone else’s finances is a significant responsibility, and although it can be unpleasant, some family members may accuse others of inappropriate spending or management.
Keeping everyone informed and holding meetings or calls can help cut down on potential disputes. If you are the one taking charge of these responsibilities, you can always safeguard yourself by keeping up-to-date records of decisions, discussions, and financial documents.
3. Organize Documents and Information
If it’s time to help your aging parent(s) with their finances, getting organized is the best place to start. Walk them through why you need these documents and how you are going to help protect this information for their well-being.
Whatever organizational structure works best for your family is the right choice. Avoid overcomplicating things or completely reinventing the wheel. Here are some important documents you should safeguard:
- Insurance policies
- Bank statements
- Brokerage statements
- Home mortgages
- Car title(s)
- Social security information
Whether it’s a file cabinet or a few important folders, it’s important to locate and organize these documents to make assisting with finances easier and manageable.
Additionally, you may need to access some of their financial accounts. This is not something that can be done on a whim and requires planning in advance. Don’t wait until the last minute. Instead, create a plan for when this could be a possibility and then execute it.
Financial institutions like banks have incredibly rigid rules regarding account access. There’s no shortcuts or quick way to bypass these security measures, so you’ll need to be prepared and informed regarding what documents need to be filled out to make this a possibility. Even if you have Power of Attorney, this can take time and preparation.
This includes steps like becoming authorized to conduct transactions like writing checks or withdrawing money — or becoming “deputy” or “agent” on their safe deposit box.
However, before signing on any dotted line, make sure to speak with a financial planner or professional to ensure you’re making the smartest decisions possible.
4. It’s Still Possible to Help from a Distance
It might be more difficult to help with an aging parent’s finances if you don’t live near one another — but that doesn’t mean it’s impossible. Luckily, there are technological advancements and tools you can take advantage of to make the most of it.
Help them sign up for auto-pay services for their month-to-month bills to ensure that they won’t miss any payments. If they haven’t already, help them set up online banking and ask to have access to their account to assist when needed. You can take a few routes here:
- Become named as a joint owner
- Be a power of attorney
- Named as a co-trustee of a revocable trust
This gives you a much easier road to step in if they need more support, along with checking for any strange activity in their account.
5. Long-Term Care Decisions
Perhaps the most challenging part of talking with an aging parent or loved one about finances is long-term care claims and decisions. This may include moving to an independent or assisted living community.
There’s no singular answer or way to approach this conversation, but there are ways to start the discussion. Keeping an open dialogue and approaching the topic with their preference in mind is always a good place to start.
Social communities can be magnificent for the emotional and mental health of an aging loved one. It can also cut down on a lot of extra costs associated with living alone — giving more flexibility to their finances.
It’s All about Them
Helping your aging parent or loved one with finances is an important phase of growing older. With the right preparation and delivery, the conversation can be an enjoyable and helpful experience that benefits their life down the road.
Each tip we went over in this article focuses on one thing — it’s all about them. Their best interests and financial future is the most important part of the discussion, and you can be prepared by coming up with a plan and working with them to safeguard their assets.