The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.
How to Start Helping Your Aging Parents with Their Finances
Discussing money and finances can be an uncomfortable and stressful conversation no matter whom it’s with. But the dreaded “financial talk” is necessary to have with those close to you — including elderly loved ones. Unsure of what to say or do? We have answers below and outline how to help aging parents with finances.
Now may be the time to start planning for your aging parents’ future or the unexpected, even if they’re fully independent today. It’s best to address the topic earlier rather than delay it, so you can help prevent issues like damaged credit, financial elder abuse or a home foreclosure. Is now the time to prepare or intervene? The following provides steps on how to help aging parents with finances:
Have “The Talk”
If you’re starting the money talk with your parents, you may be met with defensiveness and resistance. Sharing their financial information with you may feel like a threat to their independence or dignity.
You can start by explaining that you’re being proactive and initiating this conversation out of love and concern. As a strategy, share your own situation. Explain how you’ve had to face tough truths and take the right steps toward being financially prepared as well. Also, let them know that you’re here to support them, or you can help them get professional guidance if they prefer. Here are some conversation starters to ask:
- What kind of help do you need now or think you’ll need in the future?
- What do you want for your future? Do you want in-home care or do you want to live in an assisted living facility? Do you want to downsize your house or live in a senior community?
- Who do you want to help you or make decisions on your behalf?
Overall, try to get a general understanding of their money management and financial situation. This way, you can start to draft a plan.
Warning Signs: It’s Time to Check In or Intervene
- Memory loss or forgetfulness
- Easily confused
- Effects of a condition, illness or medication
- Evidence of unpaid bills
- Increased spending or unusual expensive purchases
- Signs of elder financial fraud or scams
- Can’t locate money or pay for something
- Can’t manage everyday tasks
- Excessive donations and giving lavish gifts
Make a Financial Assessment
The next step is to work together to evaluate and organize your parents’ finances. Schedule a time to review their everyday expenses and various accounts (e.g., checking, savings, credit cards). Also, notate account, mortgage/rental and personal information (even usernames/passwords), as well as gather statements, bills and legal documents. This is the time to get a comprehensive snapshot of their finances, see where they need help or learn what needs to be updated.
Manage and Consolidate Accounts
Next, you’ll want to take a deeper dive into their accounts — and possibly get your name (or another family member or trusted individual) added to their accounts, so the accounts are accessible when the time comes. This way, you can become authorized to make transactions and withdraw money when necessary. To avoid risks, it’s always recommended to consult with a qualified professional prior to getting joint access set up.1 You may also want to consolidate accounts into one or two financial institutions to simplify managing and monitoring your loved ones’ finances and potential fraud.
Locate, Obtain or Update Key Documents
It’s important to know where financial documents are if your loved one becomes incapacitated or in the event of an emergency. This way, you can act on their behalf. You may also want to discuss what legal documents they may need to get or update. Here’s an important list to discuss:
- Durable power of attorney for property/finance: Gives the authority to someone (an agent) who can handle financial (non-health care) situations and make decisions when the parent is incapacitated or unable to deal with a matter
- Health proxy: Gives the authority to someone (an agent) who can handle health/medical treatment/care and make decisions when the parent is incapacitated; this may also be referred to as a health care or medical power of attorney
- Living will: Lists specific instructions of treatments, emergency procedures or end-of-life care that the older adult wants or does not want if they’re unable to communicate clearly; this will, also known as an advance directive, also appoints someone who can make medical and health care decisions
Other important documents include guardianship/conservatorship, a long-term care plan, medical history, property deeds/titles and personal information, among other documentation involved applicable to their situation. To determine which specific documents you’ll need to discuss with your parents, you may want to meet with a qualified professional. This way, you can get detailed direction on how to help aging parents with finances in ways specific to your family.
Finances and aging — these are two topics that can be uncomfortable and difficult to discuss with your elder parents or older loved ones. Yet, the two sensitive topics go hand-in-hand. It’s a necessary topic to address if your parents need help now or if they should start to prepare for the unknown. Work as a team and involve the entire family, while making it known that you’re not trying to take control. Also, let your loved ones know you’re being proactive only so you can learn about and respect their wishes, as well as know what to do as their legal representative.