As parents age, it can become harder for them to manage their own finances and accounts. Sometimes, the child needs to step in and help them with their financial needs, especially in cases where dementia or other cognitive impairments may be beginning to set in. Experts recommend the following tips if you find yourself in the position of needing to help manage your parents’ finances in addition to your own.
Find the Documents
The first thing to do when managing your parents’ finances is to find all of the important and necessary documents. Be sure to check all desk drawers, filing cabinets, and safety deposit boxes. You should look for all bank account and investment information, retirement accounts, insurance policies, and the titles and deeds to any significant property. You should also look for all medical records and expenses at this time, as it will most likely be a growing financial concern in the near future.
Check the Cash Flow
Check the receipts, bills, checking accounts, and savings to see whether the bills are being paid on time. Use this time to also check and see if your parents are spending money on things that they don’t need or are accidentally paying the same bill more than once. This can also help you check for any financial scams or abuse, such as fake telemarketers asking for money for a charity or someone taking money out of the accounts that should not be doing so.
Find ways to streamline the financial process for your parents. Consider automatic bill pay or electronic billing to cut down on the amount of paper and mail. Also look into cutting up credit cards and canceling other means of spending that your parents do not normally use. This includes cutting down on expensive television, phone, or internet bills as well.
Split the Responsibilities
This process is not something that you need to go through alone, so consider splitting the responsibilities amongst your siblings or other loved ones that are willing to help out. Typically, assigning one person to the day-to-day finances and another to long-term planning tends to work the best when divvying up responsibilities. If you do not trust your family with this role, consider using a financial advisor.
Sign a Durable Power of Attorney
Finally, have your parents sign a durable power of attorney that grants you financial and legal decision making authority in the case that your parents are no longer able to make those decisions on their own due to incapacity. An estate planning or elder law attorney can easily draft a durable power of attorney document that can spring into effect if needed.
It is important to sign this document before any dementia or cognitive impairment sets in, otherwise the power of attorney could be challenged and thrown out in court. You can also get a separate power of attorney with the banking institutions where your parents keep their finances that is specifically for their accounts to streamline the process later on.