How to Manage Your Elderly Parents’ Money
As your parents age, it might become increasingly difficult for them to do certain things. Among other things, they might have some difficulty managing their finances properly.
For example, they might be forgetting to pay some of their bills, or they might be spending their money recklessly without being aware of how much they still have in their bank account.
It might be sad and disheartening, but if you notice some warning signs that your parents will soon need help managing their finances, you must be able to help them.
These tips will show you how to manage your elderly parents’ money.
1. Start by having an honest conversation
It’s never too early to start talking about money with your elderly parents. They might be able to control their finances now, but you should still have an honest and compassionate discussion with them about the future.
Talk to them about the possibility that you might need to manage their money for them eventually. Ask them what they think about this and whether there are things that they would like you to start doing for them right now.
For example, they might need help paying all their bills on time.
2. Get their written consent
If your elderly parents agree that they want you to take control of their money, you will need to get their official written consent. This will make it easier for you to talk to their banker on their behalf.
A power of attorney is a legal document that gives you the authority to decide about your parent’s finances. This is especially useful in situations where your parents might be incapacitated and unable to handle their finances independently.
If you think your parents might need to give you a power of attorney, they will need to meet with an estate planning attorney to prepare this document according to their wishes.
3. Consider whether they need a family office
If your family has an ultra-high net worth, it’s a good idea to get a family office involved if your elderly parents don’t already have one.
A family office can help your parents manage their financial affairs grow and protect their wealth, but also build a legacy for their children and other relatives.
If their financial affairs are complicated, it’s best to get the support and advice of professionals instead of trying to figure it all out on your own. Your parents’ family office will have their best interest at heart and know how to meet their needs as they age.
4. Get to know your elderly parents’ finances
If you can’t or don’t want to rely on a family office, you must get to know your parents’ finances. Ask them whether they have a will and prepaid funeral expenses.
Ask them about the different bank accounts they might have and about their creditors. Get all the information they can give you about their financial affairs, and keep all their important documents in the same place.
It will be easier for you to make decisions on their behalf when you have a clear portrait of their financial situation. Of course, don’t forget to ask them about their goals and their expectations.
5. Ask for the help of a professional
As you learn how to manage an elderly parent’s money, you might realize you can’t do it alone. Fortunately, you don’t have to. Different experts can help and advise you.
If your parents are wealthy, a family office or a financial advisor can help manage their investments and other assets.
Simply talking with your parents’ banker could help you understand different things about their finances. Still, you could also contact an estate planning attorney or an elder law attorney.
6. Take a few steps to simplify things
Perhaps your elderly parents are still able to manage their money but are simply becoming forgetful. In that case, you can help them by simplifying a few things.
If they have more than one credit card and a few different checking accounts, for example, try to streamline everything to avoid confusion between their different accounts and bills.
Speaking of bills, to make sure they are always being paid on time, you could automate these transactions for your parents.
7. Don’t hide anything from your parents
Whether you have to take full control of your aging parent’s money or you simply want to help make things easier for them, remember to always be fully transparent with them. Let them know everything you’re doing, explain things they don’t understand, and ask for their advice and input.
They need to know you’re taking good care of them by managing their money responsibly and reliably.
