As your elderly parents’ health begins to decline, you may face the difficult decision of whether to start playing a more active role in their financial affairs. No matter how solid your relationship is, taking over your elderly parents’ finances is a delicate situation.
As the manager of your parents’ finances, you can relieve some of the immediate burdens and head off potential costly problems down the road. Here are seven tips for managing their finances so you can stay composed, organized, and in control.
1. Have the Money Talk
As long as your aging parents are in decent physical and mental health, they are able to participate in a conversation about the state of their finances — and how you envision your role in their financial future. Offer suggestions for a plan to manage the finances going forward, but keep yourself open to their ideas, as well. If they are still physically well, come up with a plan together to follow when they can no longer make decisions on their own. Avoid pointing out any signs of mental decline or financial strain, and instead, focus on the positives — such as the opportunity to ward off future problems.
2. Locate the Documents
Another crucial tip for managing an elderly person’s finances is to track down their financial information and documents — banks, credit card accounts, investment accounts, loan statements, Social Security statements, insurance policies, vehicle titles, and property deeds. If your parents are not comfortable handing over this sensitive information, ask them to write down the names of the institutions and accounts and store it in an easily accessible place. (If you’re still having trouble rounding up the information, see if you can track down your parents’ most recent tax return, which will likely disclose their financial institutions.)
3. Obtain a Power of Attorney
Before you can interact with your parents’ financial institutions on their behalf, you need to have a legal document authorizing you to do so. A general power of attorney grants you the ability to make decisions about your parents’ money and property if they become incapacitated. A durable power of attorney, on the other hand, allows you to act on the parents’ behalf even while they are still mentally and physically capable. Try to obtain one of these documents as soon as possible — ideally, while your parents are able to weigh in on how much financial authority they want you to have.
4. Collect Bills
If you’ve hunted down the necessary documents, you should have a handle on your parents’ assets and expenses. Set up a spreadsheet outlining monthly bills. Having access to your elderly parents’ checking account is obviously optimal in this situation — and will make the bill paying much smoother. Try to pay their bills on time as long as enough money is available. Set up automatic online bill payments wherever possible.
5. Look for Opportunities to Save
One of the easier tips for managing elderly parents’ finances: Ask for a copy of your parents’ monthly statements. Check for any unnecessary fees, charges, or subscriptions that your parents no longer use. What can they live without? When you’re reviewing the statements every month, take time to note any changes from month to month. This gives you a chance to spot problems early on.
6. Work out Payment Plans
Your elderly parents, like many others, may have fallen on some hard times and racked up some credit card debt. Fortunately, you may be able to reverse the spiral. Many lenders and credit card companies are open to negotiating a balance or creating a reasonable plan to pay off the debt. You might consider hiring a credit repair service to take some of the burdens off your shoulders.
7. Discuss Long-Term Care Plans
Unfortunately, regular health insurance and Medicaid will not cover the cost of senior living facilities. While you’re discussing the state of your parents’ finances, make sure to find out whether they purchased a long-term care insurance policy, which would cover the cost of long-term care. If they do not have a policy, you will need to calculate what they can afford in terms of future care and housing — and whether you need to make any adjustments to the budget to plan for that scenario.
We’re Here for You
As the manager of your elderly parents’ finances, your own financial and credit lifestyle may well be feeling the strain, too. We can help. Reach out to our helpful team at Ovation Credit for a free consultation today.