Advisors' Corner

WEEKLY WEDNESDAY WEBINARS - Helping Seniors Manage Money

Many people worry about the ability of aging parents and other loved ones to handle money and financial affairs. Many older people need assistance because of:

• mental impairments

• visual impairments

• physical impairments (like arthritis) that limit the ability to write checks or sign documents

• loss of a spouse who handled all of the finances

• for immigrants, lack of English skills or familiarity with banking and tax procedures, and

• increased vulnerability to scammers.

When elderly people cannot handle daily finances or become more susceptible to financial abuse, the consequences can be severe. Older people who forget to pay bills could lose their homes to foreclosure, get evicted from an apartment, risk-utility shut off, or damage their credit. Those who fall victim to scams might get cheated out of large amounts of money or lose their home.

This article discusses informal methods of assisting elder relatives with their financial affairs -- including figuring out what kind of help is needed, broaching the subject with your relative, and how you can provide assistance yourself.

Assess the Situation

The first step in assisting your elderly parent or relative with money management is to determine if they need help -- and, if they do, how much help. Start by talking with your elderly relative. In some situations, the financial needs of the elderly are apparent. Some seniors may admit they need help and will welcome your assistance. Others will insist they can handle their affairs and so will resist intervention. If your relative falls into the latter category, but you see signs that assistance is necessary, do some investigating.

• Talk to your older relative's doctors, friends, and other family members. What do they say about your relative's mental capacity? Have they seen signs of confusion or increasing forgetfulness?

• Take a look around your older relative's home. Do you see lots of unopened mail, bills scattered around, or piles of papers? Can the elder show you an organized filing system or describe how they manage their money?

• Go through your elderly relative's checkbook, credit card statements, and bank statements. Look for anything unusual, including: double entries for the same item, questionable transfers, transfers involving a large amount of money, several small transfers, a change in banking habits, or payments to unknown entities.

• Ask the elder to explain large payments, or payments to entities or people unknown to you. (Often, the elder's explanation itself will give you an idea of their ability to handle their own financial affairs.)

• If the elder pays the mortgage, rent, utilities, or other monthly expenses by check, do you see consistent entries for these items in the checkbook?

• Has the elder received account alerts or letters from collection agencies?

• Does the elder fail to open and pay bills, cash checks, record checks, or list deposits?

• Are checkbooks, bank statements, or other financial documents missing or hard to find?

• Does the elder seem confused or forgetful?

• Has the elder spent large amounts of money on things such as lotteries, contests, or items from the home shopping network?

• Has the elder made unusually large donations to charitable organizations or other groups?

• Does the elder know what bank accounts and investments they have?

• Has the elder been the victim of a financial scam -- such as telemarketing fraud, investment fraud, identity theft, or predatory lending?

Broaching the Subject

It is important to broach the subject of financial assistance with sensitivity. Many older people are embarrassed by their inability to handle their financial affairs. Others are afraid that by relinquishing control of money, they are losing a large measure of independence. Some believe that children or relatives want to steal their money.

Often, the best time to discuss finances for the elderly is before your elderly parent or relative needs help. Talk about what will happen if and when they need help managing finances, agree on some "trigger" events that might indicate they need help (for example, receiving account alerts), and come up with a plan as to how the two of you will work together if and when that time comes.

Explain your concerns about certain aspects of money management, and point out possible consequences if things remain as they are (such as foreclosure, closed accounts, or damaged credit). Involve your elderly relative in the decision-making process as much as possible. Keep the focus on what they can do and make suggestions only for those tasks that you feel they need help with. Most important, listen to what they have to say about the issue.

These conversations can be difficult and emotional for all parties involved. Before you dive in, consider getting guidance from an expert on elder issues. Your local Area Agency on Aging (AAA) can provide referrals for experts, workshops, or resources in your area. (To find your local AAA, visit the federal government's Eldercare Locator at www.eldercare.acl.gov.)

Article for educational purposes only. Original source: NOLO