Plenty of older adults can use some help navigating their finances. Here are some ways you can help your elderly parents manage their financial affairs.
Determine whether they need help: In addition to possibly not even knowing how your parents will respond to the idea of you being more involved in their finances, you may be unsure about whether they truly need your help at this time. If you notice any of the following, it can be a sign that they are in need of assistance with managing their money:
- Unusual purchases. Are your parents making more than one or two random purchases for items they don’t need, never use and/or don’t fit their lifestyle?
- Unopened mail. If your parents are ignoring important financial letters, they may be unable to manage their bills and accounts any longer.
- Cognitive impairment. If your parents are having trouble remembering the day of the week, they will likely neglect paying bills on time (or even at all).
Communicate openly: Before you take any real steps toward managing, or assisting with, your parents’ finances, it’s a good idea to have an open conversation with them about your current and future intentions. Be sure to explain that if something would happen to either of your parents and they would need help, you would want them to know their finances are being managed properly. You can share that you are only there to help, and that you will not take any real action without their full permission, whether this is before or when it becomes necessary.
Gather information: Next, sit down with your parents and ask the following questions about their finances.
- Have you named a durable power of attorney for finances? A financial power of attorney (POA) will take ownership of your parents’ accounts if they were to become incapacitated. In absence of a POA, you would likely have to file a petition with a court of law for guardianship of your parents’ accounts.
- Where do you keep your financial records and assets? Make sure you have a clear list of all your parents’ records, accounts and assets. If your parents have been hiding money under the mattress for years, they may have a sizable nest egg in their bedroom and you need to know about it. In addition, keep all account information, as well as a list of your parents’ assets and their locations, in a secure place.
- What are your monthly expenses? Make a comprehensive list of your parents’ ongoing expenses, including all fixed bills and non-fixed bills, as well as seasonal and discretionary expenses.
- How do you pay your bills? Find out which, if any, of your parents’ bills are paid automatically and which account funds the money transfer. Ask about other bills: are they paid via paper check, digital check or a checking account?
- What kind of health insurance do you have? Find out if your parents receive Medicare or Medicaid benefits, and whether they have additional benefits. You will also want to inquire about possible long-term care insurance, which can cover the cost of a long-term health aide and/or senior living facility
- Have you written a will or a trust? It’s a difficult topic, but a crucial one: Make sure your parents have a plan for what happens to their assets after they have passed on, as well as the name of the attorney where it is filed.
Establish a plan: At this point, you’re ready to establish a plan for managing, or assisting with, your parents’ finances. Be sure to listen to their personal preferences and to honor their dignity as much as possible. Ask them if they would like you to take responsibility for one or more of their monthly financial-related tasks. For example, you can pay their mortgage and car payments each month, or make decisions relating to their investments.
Also at this time, consider simplifying their finances in any way you can. For example, if your parents have multiple credit card balances, you may want to consolidate this debt by paying off the balances with a SeaComm consolidation loan and then having just the one loan payment each month.
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