How to help aging parents financially

August 28, 2013 Posted In Elder Law,Estate Planning
by Colorado Estate Matters

Navigating financial discussions with your aging parents doesn’t have to be daunting. At Colorado Estate Matters, we’re here to guide you through these sensitive conversations with compassion and expertise. Let’s make this journey smoother for you and your family.

Call (303) 713-9147 to schedule a free consultation with a Denver elder law attorney and discover the best ways to support your parents’ financial needs as they age.

How to talk to aging parents about finances

Some families may find it difficult to discuss subjects like finances and end-of-life care. One suggestion is to use other people’s experiences.

An event happening to someone close to the family could facilitate the start of a conversation between aging parents and their adult children. Often, personal events serve as triggers for individuals to start considering what they might do in similar situations.

Another suggestion involves adult children getting their own financial house in order. Again, things become personal when they involve loved ones, and aging parents may be more receptive to discussing financial matters if they see their children preparing their paperwork. When parents open up, they should be talked to as peers rather than people incapable of handling their business.

While family dynamics can complicate matters, a smart approach should make these conversations less difficult. After bringing up the topic, those with aging parents may want to seek out the assistance of an attorney. An attorney can help parents and children prepare necessary financial documentation, healthcare directives, and wills. They can also listen to concerns and recommend courses of action.

Aging parents’ financial checklist

The National Council on Aging estimates that as many as 80% of older adults struggle with making their money go as far as they need. Numerous scams aim to take retirement or other savings away from those who cannot correctly judge whether an opportunity is “too good to be true.” Having an eye on your parent’s financial situation enables you to ensure they do not go without as they age.

If you have siblings, meet with them to determine who among you is best suited to handle the finances. These may be uncomfortable conversations, but they are essential to managing things smoothly later. Then, follow this checklist for aging parents’ finances.

1. Gather details about your parents’ finances

Your first step is to sit down with your parents and honestly discuss their assets and liabilities. Many older individuals dislike talking about money, and some may fear you’re trying to gain unfair control of what they have. It’s vital to calmly lay out your concerns to show you want to ensure they keep what they have and can pay off anything they owe.

In particular, you should:

• Create an inventory of income, investments, debts, properties, vehicles, artwork, jewelry, and other items of value. Include insurance policy numbers, safe deposit keys, property deeds, and building keys.
• Make a list of their personal information, such as driver’s license numbers, Social Security numbers, Medicare/Medicaid numbers, birthdays, and full names.
• ‍Collect the usernames and passwords for all online accounts, financial institutions, government agency accounts, computers, phones, and other important devices. Store it in a safe place to avoid identity theft.
• ‍List all bills, including monthly, quarterly, and annual expenses. Note who these are paid to, how to contact them, and the username/password details for every account.
• ‍Determine where your parents keep their estate documents, such as wills, trusts, and other information. Review these with them to identify any necessary changes, make those with the help of an estate planning attorney, and then place these documents in a safe location.

2. Get the legal right to make financial transactions

A key part of helping aging parents with finances is obtaining legal authority to manage their accounts and property. Your estate planning lawyer can help draw up a personalized, durable power of attorney, which takes effect if your parent becomes sick and cannot make their own decisions. Suppose they already have a medical condition that has reduced their mental competency, such as Alzheimer’s disease. In that case, you can deposit their checks, pay their bills, and sell or buy property, as needed.

3. Notify financial institutions and government agencies of your status as power of attorney

Once you have your POA, you must ensure the appropriate institutions and agencies recognize this authority. Rightfully so, these groups will want copies of your POA and may require you to appear in person with your parents to verify identities and that your parents are voluntarily making the changes. A Colorado POA does not require witnesses, but it should be notarized.

If your parents cannot appear in person due to mental or physical incapacity, contact each institution to determine which documents they need. You may also need to present medical records indicating their status and inability to appear.

Many government agencies, such as Medicare, the Social Security Administration, and the Veterans Affairs Department, have separate forms to recognize authorized representatives. Complete the forms and prepare all necessary documents to submit your request to help your aging parents and their finances.

4. Streamline your parents’ finances

Once you have everything organized and a POA in place, you should take these actions:

• ‍Avoid connecting their financial accounts with yours, which could negatively affect their eligibility for Medicaid or other government benefits.
• Consolidate financial accounts and credit cards by moving funds into only one checking and one savings account. Transfer as many credit card balances onto a single card as possible and close unnecessary accounts.
• ‍Establish automatic electronic bill pay for utilities, mortgages, car loans, and other recurring bills, opting out of paper statements so your parents don’t see them. Have your parents’ financial institutions send statements to you directly.
• ‍Provide them with prepaid credit cards or limited cash so they do not spend too much at any one time.
• Review their services and subscriptions, closing any duplicate accounts or unnecessary services.
• Remove cards and cash from their wallets and handbags to limit the damage if they are stolen or lost.

5. Monitor and protect

Review statements for all accounts and insurance policies to ensure no unauthorized expenditures or missed payments. Go through their phones and block spam phone numbers, encouraging them to answer calls only from recognized numbers. You can also create a my Social Security account to manage their benefits payments.

Turn on bank account alerts that notify you of transactions over a certain amount. Contact all credit reporting agencies and institute a credit freeze to prevent unauthorized lines of credit under their names. Finally, help them sign up for the U.S. Postal Service’s informed delivery service that notifies you of mail packages they are scheduled to receive each day.

6. Keep thorough records

As a POA, you will become responsible for assisting your parents with their tax returns, so you should keep detailed records of all spending, income, and property transfers. Maintain all receipts for ATM withdrawals if you give them cash, and set up a filing system to collect statements for every company or utility they pay. Track any payments you receive as their caregiver for your tax return.

We’re here to facilitate all your estate planning matters

Learning how to help your aging parents with finances is one of the most daunting challenges you might face as you both get older. Working with Colorado Estate Matters doesn’t have to be overwhelming. Contact us at (303) 713-9147 to schedule a free consultation about how to talk to your aging parents about finances.