Taking charge of a loved one’s finances

No one likes to talk about their finances, especially if the conversation is casting doubt on their ability to manage money.

For many seniors, managing their finances is key to their feelings of independence. It's a task they have done all of their adult lives, so why things should be any different just because they are older?

Unfortunately, with age comes issues. Seniors may have cognitive or memory issues that interfere with their ability to manage their finances. Or, they may be vulnerable to unscrupulous people who will take advantage of their generosity or overcharge them for services they can’t do without.

But giving up control of finances means giving up a measure of independence – especially if they are handing the reins over to an adult child.

It’s important to keep tabs on a senior loved one’s finances to ensure that they have the money they need to live today and for the years to come.

Warning signs

Some obvious signs can indicate your loved one is no longer able to manage their finances for their best health and welfare.

• Unopened bills piling up in the home
• Utilities or other services cut off for non-payment
• Phone calls from “unidentified” phone numbers, which often means a bill collector
• Out-of-date checkbook or missing checks
• Unexplained large withdrawals from checking, savings or other accounts
• The loved one is giving away money
• The loved one mentions financial offers marketed to older adults such as reverse mortgages
• Inadequate food, household and personal care items
• Changes in spending habits such as large withdrawals from an ATM
• Multiple credit cards with high balances

Talk Early

The best time to talk is before there are any financial issues when your parent or elderly loved one is less likely to feel defensive about you offering assistance.

Bring together your loved ones, involved family members and a trusted legal or financial professional who can help guide the discussion and decisions. Talk about money management, access to accounts and power of attorney.

Make an offer to help – not take over. By starting early, you can ease into an arrangement that leaves the senior loved one with a comfortable sense of control.

If you have seen warning signs, the advice of a professional can help make the potential dangers more real for your loved one.

Assess their finances

Some needed fixes are easy to find – unpaid bills, overpaying for services such as lawn care, subscriptions or memberships that are no longer useful. Others may require a little digging.

Places to look for potential issues include:

• Life insurance policies
• Long-term care policies
• Investment accounts
• Retirement funds
• Stocks
• Pensions
• Social Security
• Other benefits
• Safety deposit boxes

A financial professional can help you navigate the various accounts to make sure your loved one is paying the minimum and receiving the maximum. It's also an excellent time to talk about the potential impact of estate taxes and how you can protect your loved one's assets in the event of their death.

The paperwork

Who has the right to do what when it comes to a loved one’s finances? It can take some of the stress out of dispensing responsibilities when the right paperwork is in place.
At the very minimum you should have a legal professional help you create the following safeguards:

• Designated power of attorney
• Conservatorship
• Trust
• Living Will
• Health care proxy
• Will

Power of attorney allows you to access your parents' finances and act on their behalf. If you need to take control of the finances of a loved one who's no longer cognitively competent, you may obtain guardianship or conservatorship.

Hire a financial professional

A certified financial planner, accountant or daily money manager can help your loved one feel confident that their matters are handled competently and professionally. They will be able to help you assess the current finances and project what will be needed to sustain your loved one's needs over time.

The most important thing is to show respect for your loved one and their ability to care for themselves. You’re not here to take over; you're here to help out (even if you are, in fact, taking over.) Start with the minimum assistance needed and work your way up. Once your loved one has grown accustomed to your support, it may even be a relief for them not to have to deal with monthly bills and money management.

Your local Area Agency on Aging may be able to help you discuss finances with your elderly loved one and assist with bill-paying tasks. Find your local provider through eldercare.gov.