Being the child of an aging parent can often come with unexpected responsibilities and decisions that need to be made. One of the biggest responsibilities of this position is knowing when and how to start taking over your parent’s finances.
It isn’t easy to navigate the time in life when the roles of parent and child begin to shift. The conversation about taking care of your parent’s finances may be an awkward one, but don’t let the awkwardness prevent you from having it. Look at it this way: When your parents can no longer be responsible for their financial affairs, someone will intervene. But, unfortunately, if it’s not you, it may be someone who does not have the best personal or financial interests at heart.
When Is It Time to Start Taking Over Your Parent’s Finances?
Aging isn’t something that happens overnight. So before possible mental or cognitive issues become an issue for your parents and hinder their decision-making, have a conversation with them about their wishes for their financial care.
This isn’t an easy conversation to have. Aging parents wanting to hold on to their independence as long as possible often avoid the conversation. Adult children not wanting to meddle in their parents’ affairs also often avoid the conversation. The result of waiting and ignoring the issue, however, can be dire. It could mean closed accounts, damaged credit, unpaid insurance premiums, and money lost to scam artists who prey on older adults.
Scammers aren’t the only threat to your parent’s finances, however. Seniors themselves are often their own threat. Look for some of these signs to let you know that it may be time to step in and help your parent manage their money:
- Piles of unopened mail at their house
- Incidents of losing cash
- Calls from creditors
- Complaints about not having enough money
- Frequent and uncharacteristic trips to the bank
- Difficulty with tasks like paying bills or balancing the checkbook
If you start to notice these signs, it’s important not to delay talking to your parent about putting their financial affairs in your hands.
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How to Take Charge
If you have the opportunity to take over your parent’s finances early, take advantage of the opportunity. The process of taking control can be a lot trickier to navigate if an injury or illness forces you to take over suddenly.
When it’s time to take control, here are some steps you should take to make the transition as easy as possible for both you and your parents:
- Start Early and Start Slow
Having conversations with your parents about their finances regularly before taking over 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.
- Organize Financial and Legal Documents
Work with your parents in taking an inventory of what accounts they have and begin recording the account numbers. Check these accounts to make sure they are all in good standing. Make sure you can locate legal documents such as birth certificates, insurance policies, deeds, and wills. Keep these documents in a secure location, so you know where they are when you need them.
- Consider a Power of Attorney
Power of attorney is a legal designation that gives you power over your parent’s legal and financial matters. When choosing a power of attorney, don’t let pride get in the way of making the right decision. The person chosen must be ready to assume responsibility to sort through accounts that may or may not be in good shape. If you are not good with your own finances, finding another family member to be power of attorney might save a lot of stress and problems.
- Communicate Clearly and Often
You probably already know that money can affect all kinds of relationships, but it can especially affect a family dynamic. So make it a practice to communicate openly with your parents and other family members about your parent’s financial situation and how you are spending their money. This kind of open communication can help avoid misunderstandings between all parties who have your parent’s best interests at heart.
- Consider a Third Party
It can’t be overstated 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 help 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.
Finding yourself trading roles with a parent as the financial caregiver and custodian can be overwhelming. Remember that the sooner you start to understand your parent’s finances, the easier it will be to take them over when they need your help to stay financially sound.
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Elder Care Alliance has served older adults and their families in California for nearly 20 years through five different senior living communities. From day one, our mission and vision have been centered on the care of seniors — putting their well-being and dignity at the forefront of all we do.
We operate a network of communities that offers a range of senior living options with varying levels of service, support, and care. Whether you’re looking for a little assistance or a higher level of care, a short-term stay, or a new home, Elder Care Alliance has a community to meet your needs. We would love to give you a tour of one of our communities and answer any questions you have as you explore the best community for yourself or a loved one. If you would like to set up a virtual tour or see us in person, please call us today at (510) 617-5905.