TIME TO TALK TO YOUR AGING PARENT ABOUT THEIR FINANCES? WARNING SIGNS AND HELPFUL TIPS TO NAVIGATE THE CONVERSATION
For one of our clients, it started innocently enough. She noticed her mother hadn’t changed out of her pajamas that day. Then her mom started staying in them most every day. She rarely left the house, began eating less, sleeping more and leaving stacks of unopened bills by her chair.
It’s hard, scary even, watching a parent or elderly loved one become increasingly forgetful or neglect basic household duties or personal care. Is this the start of a permanent shift, you may wonder.
What do we do? How will we manage?
Being the child of an aging parent often comes with a load of new responsibilities. Often, it’s unchartered territory. You are now, for all intents and purposes, assuming a parental role—the child becoming the parent—shouldering caretaking duties and becoming the loved one’s advocate. This can include managing their finances.
You’re not alone. About 14% of the U.S. population, or around 37 million people, provided some type of care for an aging loved one in 2023.
WARNING SIGNS THAT YOUR AGING PARENT MAY NEED HELP WITH THEIR FINANCES
Much like our client’s experience with her mother, these are a few common warning signs indicating that it maybe time to help your aging loved one with their finances.
● There are piles of unopened mail, including bills, at their house.
● There is also a noticeable increase in calls from collection agencies (overdue payments).
● They have suddenly made large purchases that don’t fit their lifestyle or have cut back dramatically on things they used to enjoy.
● They lose track of cash or checks.
● They complain about not having enough money.
● They’ve sent money to participate in multiple contests and sweepstakes.
TIPS TO BEGIN THE TRANSITION PROCESS
Start early and go slow
Having conversations ahead of time, before you’re thrust into a crisis when you must take control of their finances, has two benefits. It makes the transition smoother and gives you an overall view of their whole financial landscape.
Ease into it as much as possible in both talking about it and in doing it. Be respectful during your conversations and avoid the urge to take over right away.
Use "I-statements,” like the ones below, to show that the feeling sits squarely on you.
“I'm worried that if something happens to either of you, we won't know what bills need to be paid.”
“With rising costs, I'm concerned a major illness could wipe out your savings.”
Remember, you’re offering help, not control.
Approach the situation and resulting conversations as though you are offering support with their finances, rather than taking them over completely.
Other tips as you begin attending to your parents’ financial care:
Gather Information and Documents
Create an inventory: List all accounts, assets, debts and contact information for financial advisors and legal professionals.
Collect legal documents: Obtain important documents like wills, trusts, insurance policies and any power of attorney.
Review tax returns: Check past tax returns to understand their income sources.
Establish Legal Authority
Get a Power of Attorney (POA): A durable power of attorney is a legal document that grants you the authority to make financial and legal decisions on their behalf.
IMPORTANT: This document must be created while your parents are still mentally capable and able to make the decision.
Notify the Proper Agencies
Inform your parents’ financial institution: They will need a copy of your power of attorney document on hand.
Let other institutions or agencies know too: This includes Social Security or Veteran’s Affairs and Medicare. Be sure to inform the agency about your legal role.
Organize and Simplify
Consolidate accounts: Simplify accounts by consolidating bank and investment accounts to reduce complexity.
Automate bill payments: Set up automatic payments for regular bills to avoid missed payments and confusion.
Manage statements: Arrange for electronic statements to be sent to you and opt your parents out of paper statements.
Continue to Monitor
Watch for red flags: Be aware of signs like unusual spending, unpaid bills or confusion about money, which may signal a need to step in.
Communicate regularly: Maintain open communication with your parents and schedule regular check-ins to stay updated on their financial situation.
Place a fraud alert on their credit report: Add another layer of security by requiring lenders to verify their identity before approving new credit.
SIDE NOTE: Am I responsible for my parents’ credit card debt after they die?
The good news? No, you are not personally responsible for your parents' credit card debt unless you were a co-signer or joint account holder.
The reality? The debt must be paid from your parents’ estate—their assets and property—before any inheritance is distributed to heirs. If there’s no money in their estate, the debts will usually go unpaid.
ADDITIONAL RESOURCES
Older Adult Nest Egg—offers tools to give you peace of mind about your aging parents’ finances and how to protect them. The SAFE program also provides financial coaching and post-scam assistance.
Consumer Financial Protection Bureau (CFPB)—offers guides and resources for financial caregivers.
Eldercare Locator—connects you to local agencies for financial and legal advice and other services for older adults.
And remember, these are broad strokes about beginning the conversation with your parents or a loved one. Assuming control of their finances is like looking into their deepest secrets. We can help you and your family navigate these new waters and find peace on the other side. Contact us today.
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