Senate Cents: A Financial Wellness Blog

Being the child of an aging parent often comes with unexpected responsibilities and difficult decisions. Not only do your roles begin to shift as you take on more duties to care for your parent, but you may also end up making choices for your parent that they would normally make independently. If the time comes when your parent is no longer capable of making financial decisions due to a medical condition or escalating Alzheimer’s or dementia, you need to know how to take over your parent’s finances. 

When Is It Time To Start Managing Your Parent’s Finances?

Aging isn’t something that happens overnight. So before cognitive or physical factors become an issue for your parent and hinder their decision-making, have a conversation with them about their finances.

This isn’t an easy conversation to have. Aging parents wanting to hold on to their independence as long as possible often avoid the topic. Adult children not wanting to meddle in their parents’ affairs also often avoid it. The result of waiting and ignoring the issue, however, can be dire. Your parent may see their accounts closed, credit damaged, insurance lapse, and retirement funds drained.

There are early warning signs that indicate it may be time to step in and help your parents manage their money. Watch out for the following behaviors or events:

• There are piles of unopened mail at the house
• Your parents seem to lose track of cash or checks
• Your parents cannot explain calls from creditors
• Your parents complain about not having enough money
• You notice frequent and uncharacteristic trips to the bank
• Your parents send money to participate in multiple contests and sweepstakes 
• Physical ailments or memory problems make it difficult for your parents to keep up with everyday financial tasks

If you start to notice these signs, it’s important not to delay talking to your parents about putting their financial affairs in your hands.

A Step-by-Step Guide: How To Take Over Finances for an Elderly Parent

There’s no right way to approach your parent about financial matters. The best thing you can do is follow these steps before your parent becomes too ill or is incapacitated and cannot communicate with you. Use this information to create a checklist for taking over parents’ finances.

1. Start Early and Start Slow

Having conversations ahead of time before you have to think about how to take over your elderly parent’s finances has two benefits. It makes the transition smoother, and it gives you a better picture of their whole financial landscape. 

If you can, ease into the process as much as possible instead of diving in. For example, if one of your new responsibilities will be to help pay bills by writing checks from their account, do this task together for a while before you do it independently. Make sure you get written consent from your parent for any type of financial responsibility they want you to take on, such as setting up their accounts for automatic payments or canceling a utility.

2. Organize Financial and Legal Documents

Before taking over elderly parents’ finances legally, get all of their documents organized and secured in a safe place. At this stage, you’ll need to complete the following: 

• Record account numbers 
• Check that accounts are in good standing
• Locate legal documents such as birth certificates, insurance policies, deeds, and wills
• Ensure all policies and documents are not out-of-date or invalid
• Note down important contact information your parents keep
• Store all sensitive documents in a secure, fire-proof box

This step can take some time, especially if your parent is still getting used to the idea that they may not be financially independent one day in the future. Assure your parent that you want to move at a pace that’s comfortable for them and that you won’t take over unless it’s absolutely necessary.

3. Consolidate Financial Responsibilities

As you get to know your parents’ financial reality, you may start to notice that they have different systems for bills, credit cards, services, and utilities. At this point, you should encourage them to consolidate and streamline their finances to reduce the burden of keeping up with physical checks and multiple carriers. 

Start by ensuring that you can switch the income they receive to direct electronic deposit. That way they don’t have to sign checks and stand in line at a bank to replenish their accounts. After that, work on consolidating credit card accounts or closing them altogether and getting your parents set up with automatic bill payments.

4. Watch Out for Scams and Identity Theft

Older adults are often the prime targets of financial scams and identity theft. As they age and you contemplate how to take over your parent’s finances, you need to stay alert for signs of financial insecurity and danger. 

Talk to your parents about signing up for a credit monitoring service, and get their permission to receive account transaction alerts in your email or personal device. Get your parents’ numbers and address on the national registry to opt out of spam, and keep an eye on the mail that arrives at their home.

5. Maintain Separate Finances

Your parents might suggest that you combine accounts so that they don’t have to worry about getting behind with the bills, but you should always maintain separate finances. When it comes to taking over elderly parents’ finances legally, things can get messy if you have shared accounts. 

Even though it seems convenient, you need to know what resources your parents have and how to use them appropriately when it comes to that point. You should not mix your personal finances with your parents’.

6. Consider Power of Attorney

One of the most important things that comes up when looking at how to take over your parent’s finances is power of attorney. This is a formal designation that gives you power over your parent’s legal and financial matters. Power of attorney is something your parents can only grant while they are still mentally competent and able to make this decision. 

Exploring this option doesn’t mean your parents need to give you complete control of their lives. There are various forms of power of attorney, some temporary and some permanent. Because it is a legal document, you and your parents can adjust it to fit your expectations and needs. It’s best to consult with a lawyer who specializes in elder law to complete this step.

7. Communicate Clearly and Often

You probably already know that money can impact all kinds of relationships, but it can especially affect family dynamics. So make it a practice to communicate openly with your siblings and other family members about how to take over your elderly parents’ finances. This kind of open communication can help avoid misunderstandings between all parties who have your parent’s best interests at heart.

8. Speak to a Financial Planner or Attorney

The financial health of your parents is almost as important as their physical health. Just as you wouldn’t hesitate to bring in a medical expert for an ailment, don’t hesitate to bring in financial experts to help keep everything in order and share the burden. Financial planners or elder law attorneys know the ins and outs of your unique situation and can help you make sound decisions.

9. Notify the Proper Agencies

As time progresses and you begin taking over your elderly parents’ finances legally, make sure to notify the proper agencies. If you do have power of attorney, your parents’ financial institution needs to have a copy of the document on hand. This also applies to any institution or agency that oversees retirement benefits such as Social Security or Veteran’s Affairs. Similarly, if your parents are on Medicare, inform the agency about your legal role.

10. Keep Up-to-Date Documentation

When it comes to serious changes such as taking over your parent’s finances, you have to document every step of the process. While you will likely reach important points of consensus through discussion, try to follow up your in-person conversations in writing via email. 

Take detailed notes of what you talked about and include dates. Show your parents and siblings that you are keeping track of how the conversations progress so that everyone feels included. Maintaining proper documentation will help you avoid legal problems in the future.

Is there a checklist of what to do to take control of a parent’s finances?

As you plan to move toward overall management of your parent’s finances, check off each of these items one at a time:

• Begin an open and ongoing conversation about the future of your parent’s finances
• Take stock of your parent’s current financial landscape, including accounts, income, and expenses
• Organize and secure your parent’s financial and legal documents
• Communicate with your family members about any plans you make with your parents
• Streamline your parent’s bill payments and consolidate any leftover debt
• Assume one financial task at a time as your parent sees fit
• Discuss power of attorney and consult a lawyer to draft a legal document
• Be aware of actions and situations that signal when it may be time to step in and take control

Having this checklist on hand will help you navigate challenging situations that come up as your parents age.

How To Take Over an Elderly Parent’s Finances With Support

Trading roles with a parent as the financial caregiver and custodian can be overwhelming. Lean on your siblings and other family members to get through it as you discuss how to take over your parent’s finances. If you can, share some of the responsibilities with another person so that you don’t shoulder it all yourself. Remember that the sooner you understand your parents’ finances, the easier it will be to take over when they need your help to stay financially sound.

Additionally, here are some resources can help elderly individuals and their family members access much-needed support and information to manage health, financial, and daily living challenges more effectively:

• National Council on Aging (NCOA) | ncoa.org

The NCOA offers a wide range of resources for seniors and their caregivers, including financial advice and tools to help manage money wisely and securely.

• Family Caregiver Alliance (FCA) | caregiver.org

The FCA provides extensive educational resources for caregivers, including webinars, fact sheets, and articles specifically tailored to the challenges of managing another person’s finances.

• Consumer Financial Protection Bureau (CFPB) | consumerfinance.gov

The CFPB has guides and resources specifically designed for those acting as financial caregivers. This includes easy-to-understand information on legal responsibilities and how to protect the assets of those you’re caring for.

• Eldercare Locator | eldercare.acl.gov

A public service of the U.S. Administration on Aging, the Eldercare Locator connects users to services for older adults and their families. It can also provide referrals to local agencies that help with financial and legal advice.

• Social Security Administration (SSA) Representative Payee Program | ssa.gov/payee

The SSA offers a representative payee program where a designated individual receives and manages the Social Security and Supplemental Security Income (SSI) payments of someone who cannot manage or direct the management of their money.

Navigating the financial landscape for aging parents is undeniably challenging, but it's not a journey you have to embark on alone. With careful planning, open communication, and the support of resources tailored to financial caregivers, you can ensure your parent's financial well-being while honoring their independence and dignity.

Article content and third-party links are provided for information purposes only. Originally posted on eldercarealliance.org