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The Heritage Law Center, LLC Blog

Role Reversal: Managing Your Parents’ Finances

POSTED ON: December 21, 2016

As we have mentioned in recent blog articles, the Holidays are the perfect time to check in on your aging parents whom you may not see on a regular basis if you live a significant distance apart. Part of evaluating how they are faring day to day is a conversation about financial management. It is not uncommon for seniors to face a decline in their ability to manage their money effectively due to cognitive decline, whether slight or significant.

Signs to Watch For

Some of the signs that could indicate trouble include:

  • Difficulty with simple tasks, like bill paying or balancing the checkbook
  • The appearance of unusual expensive new purchases
  • Complaints about not having enough money
  • Unopened mail piling up
  • Forgetfulness about cash
  • Calls from creditors
  • An increase in, or new habit of, gambling

It’s Hard to Admit

It is not uncommon for aging adults to struggle to admit that they need help from their children, especially in managing their money. One option is to consider bringing in a professional, as they may take advice from a professional that they wouldn’t take from their child. Experts recommend inviting your parents to meet with a third party, such as a senior financial advisor or CPA, if you’re concerned about their ability to handle their funds. With some independent advice, everyone can feel comfortable by establishing the money management approach. Upon the decision that management will be handed over, a Power of Attorney document (POA) will be critical to provide proof that your parents have granted you permission to act on their behalf.

Even if you don’t have worries about your parents’ physical or mental health (yet), it’s a good idea to familiarize yourself with their finances as they approach advancing age. The sooner you start to integrate yourself into that element of their lives, the more comfortable they may be in including you in important decisions. It can ease the transition when the time is necessary to assume full management. To start, you will want to gather information about:

  • All the financial accounts your parents have
  • What bills and subscriptions they have
  • Login information for online accounts
  • Keys to safety deposit boxes

Time it Right

Assuming management of your parents’ finances can be complicated, but the longer you wait to become involved the harder it can be to sort out all of their accounts and make the necessary legal steps to ensure successful results. First and foremost take the time to account for all assets, liabilities, debts and income. This complicated process can be made more complicated if you wait until they are no longer able to help. Consider using tax returns and credit reports to help piece together the complete picture.

Bills and Budgets

You’ll need to evaluate all of your parents’ bills and then create a budget and a spending plan. If you need help putting together a feasible budget for your parents, consider speaking with a certified credit counselor. Also, review the Consumer Financial Protection Bureau (CFPB) series of helpful guides for those attempting to manage someone else’s funds. The guides cover powers of attorney, court-appointed guardians, trustees and government fiduciaries.

Document Everything

Money has been known to drive a wedge in even the strongest families. To avoid possibility of concern, document every move you make with your parents’ money. The easier it is for you trace your transactions, the less likely it is that your work will be questioned.

 Stay Involved

There’s no right way to take over management of your parents’ finances, but waiting too long and doing nothing simply increases the chances that the people you love could fall into a detrimental financial situation.

For more information, please contact The Heritage Law Center at mkarr@maheritagelawcenter.com or 617.299.6976.