As your parents get older, you’re going to have growing concerns about their health, happiness, and finances. You can prevent them from hardships if you step in to manage your parent’s finances early on. This will take more than a weekend’s time to establish though. The time to start is today. Here are a few tips on how you can successfully prepare to manage your parent’s finances.
Know What the Warning Signs Are
Take a look around their home. Do you see bills stacking up on the table or unopened and thrown away in the trash? Notice how much household goods and food they have. If they are running low, this could be an indicator of financial struggles. If this is the case, then you need to look into financial planning matters.
However, if you find the money is available and your parent’s state they’ve simply forgotten to pay a bill, you’ll want to have your parent’s doctor evaluate them for dementia. With dementia comes confusion and memory loss. Displaying signs of dementia are clearly an indicator that it’s time for you to manage your parent’s finances. In either scenario, it’s time to look into executing someone as your parent’s power of attorney.
Talk Things Over with Your Parent
You never want to approach the situation with a forceful hand. Talk to your parents openly about your concerns. Tell them you’d like to get a few processes in place so you can be ready to help them when the time comes to manage their finances.
Some parents may be willing to go along with it while others will rebel against the idea. After a few patient talks and asking for family and trusted friends to help, you may need to be a bit sneakier to get what you need to help your parents.
Gradually Make the Changes
To start helping your parents and gain their trust, it’s important to let them know what you are doing and why. For instance, there are many scammers who prey only on seniors. They target them via mail, the internet, phone, and in person. They either take the money directly from them or find ways to phish for their personal information and open accounts in their name.
• Place your parent’s phone numbers on the do-not-call lists.
• Order and review their free credit reports at Annualcreditreport.com to verify there is nothing suspicious going on with their account.
• Monitor their report with a free or low-cost credit monitoring program. Check with your parent’s bank to see if they have any discounted offers.
Tell your parent you want to help them make good spending decisions. Set your parent’s up on a cash-spending plan. This will ease any tension and help you to monitor their spending habits.
A great talking point is to tell your parent you’ll be responsible for paying their bills that can free up their time for activities they enjoy doing. They now have time to go golfing, gardening, exercising, and other leisure activities with their friends.
Make a List of All Their Financial Accounts
If your parents will cooperate with you, make a list together of all their financial institution’s bank accounts, money market accounts, safe deposit boxes, and even social security payments. If everything isn’t documented in one easy location or they are uncooperative, you can now get sneaky. Take a look at their tax return. It should list any interest income and dividends, as well as the financial institution’s name associated with them.
Get Documentation of Power of Attorney
Having access to your parent’s bank account information is one thing, but being able to sit down with an account manager and discuss your parents’ account is another. This is why it’s important for your parents to assign a power of attorney as soon as possible under their own cognizance. The process is much smoother. Otherwise, if you must seek this on your own, this could be a long court process. The banks will not be able to discuss any financial matters without your parent’s approval.
Cease Unnecessary Bills
As you start to manage your parent’s finances, you’re going to find some expenses could be eliminated. These include magazine subscriptions, credit cards with annual fees, and health club memberships they no longer use.
Review bank and credit card statements to see if there are any unreasonable amounts given to a charitable organization. A simple donation to a cause they believe in is fine; however, someone with dementia can go overboard.
Get the Help of a Financial Planner
After you have all legal rights, you can start having all account notifications sent to you. The important thing to do now, rather than later, is having a financial planner assist you in prioritizing bills and making investments.
You don’t know what the future holds for your parent. To successfully manage your parent’s finances, you want to have enough funds to last them for the rest of their lives. As their health fails, you’re looking at a lot of medical expenses, both in and out of the home. So to ensure your parents live comfortably, talk to a financial planner to help you budget your parent’s finances. It also takes the pressure off you to make the best decision regarding their money.
Set Up a Bill Payment System
Next, figure out a bill payment system you are comfortable with. Each bill can be paid automatically each month or opt to pay them online yourself. As you manage your parent’s finances, just ensure to take your parent outside of this circle, so they don’t get confused and double up on a payment.
As you can see, these steps can’t be handled overnight. Have the conversation with your parents today about their financial health. Starting early to manage your parent’s finances will make the process so much smoother down the line when it’s time for you to fully take over.