Written by: Deborah Cartisser
It’s difficult to know when to step in to help with your parents’ finances. Adult children often silently wonder if the parents need help, and end up staying on the sidelines too long, waiting for the parents to ask. All adults succumb to declines in mental acuity so it’s not a question of “if” but “when” they will decline. According to David Liabson, a Harvard behavioral economist, age 53 is when adults reach their financial decision making peak, or when they make the fewest financial related mistakes. That information should fortify us all with the courage we need to intervene if we suspect a problem. The question then becomes where and how to start?
Look For Red Flags
Look for signs of disarray in their home. Are there piles of unopened mail or unpaid bills? Are they going to the bank more often to get cash or have become forgetful about cash? Do you notice expensive new purchases that are uncharacteristic? Do they have difficulty figuring out a restaurant tip or trouble balancing their checkbook? Are there more solicitations from charities in the mail? Were they recently the victim of a scam or fraud? Any behavior that is out of character could be a sign that they need help. When in doubt, ask them how they would like you to help.
Help Them Make A Plan
Share your observations and let them know who is willing to help and how. Talk about the ways you can help them and tasks you are willing to take over. They are unlikely to turn everything over to you so map out a step-by-step plan. Start with simple tasks that won’t feel like they are giving up all of their control at once. Get them to buy in to a plan if you can. Understanding how they would like things to be handled can go a long way toward getting them to agree to accepting help.
Ask For Key Introductions
Ask to meet with their financial advisor, their accountant and their estate planning attorney. If there is an upcoming meeting or call scheduled, see if you can sit in. Getting to know these financial professionals can help create conversations where you can share observations and concerns. This is another place to get feedback on your parent’s behavior. Sometimes a parent will listen to a suggestion from a professional that they can’t entertain from an adult child, so enlist help from their professionals.
Gather Important Documents
Learn where your parents store their important paperwork. Where do they keep insurance policies, property deeds, safe deposit keys. Do they have basic estate documents that were drafted in the past 10-15 years? Ensure that the individuals appointed in their estate documents are the people they would ask to serve today and if not, have their documents updated. Enlist support from the people appointed in those documents and be sure the appointees know what role they are supposed to serve. If your eldest sibling is the health care proxy and he lives the farthest from your parents, they might want to change that appointment. The durable power of attorney and health care proxy are the important roles while your parent is alive. The durable power of attorney is the person appointed to manage their financial affairs. Know who this is and get them involved.
Determine where your parents have accounts and how each is titled. Make a list of all bank accounts, credit cards, investment accounts, retirement accounts and all sources of income they receive. You may want to start out by simply monitoring the account activity with them monthly. For the first few months, look over the statements when they receive them and go over the activity, looking for anything unusual. From there, suggest automating some of the basic bills and eventually move to take over the bill payment function all together. Monitor credit card statements and solicitations from charities. Help them once a year determine where they want to make charitable contributions and have them made from their IRA required minimum distributions, if possible. Charities are notorious for sending solicitations to donors more than once a year and elderly people often end up donating more often than they intend to. Check the beneficiary assignments on their retirement accounts to be sure they are up to date. If you see any signs of fraud, bring it to the attention of the company that holds the account and ask to have a new account number assigned. Freeze your parents’ credit by contacting the three credit agencies (Experian, TransUnion and Equifax). You can unfreeze it if needed, but it will prevent a fraudster from opening new credit in your parents’ name.
Hire A Professional
If your parents won’t let you help them, consider hiring a professional bill payer or a daily money manager. Start by asking their financial advisor or accountant if they provide these services and if not, whom they recommend. Set up checks and balances where others in the family can review the account activity or approve bills before they are paid.
Simplify And Automate
Understand their monthly expenses and their sources of income. If checks are being mailed to the house, have them set up for direct deposit. Consolidate accounts where you can. Ask them why they have multiple bank or investment accounts set up and see if they can be rolled up into one. Look at the account history before closing an account to be sure you aren’t shutting off a deposit or payment you didn’t know about. Look up their names up on www.missingmoney.com to see if there are inactive accounts, uncashed checks, etc. in their names.
Don’t Try To Do It All Yourself
Enlist family members to offer to assist in the different roles and devise systems for communication and oversight. In my family, we have one child in charge of all health care duties, a second child pays the bills and a third manages the financial investments and serves as a co-trustee. This person is also the durable power of attorney. All have visibility into the financial accounts and there is constant communication to keep everyone apprised of what is happening. Divide and conquer where you can so the child who lives closest isn’t saddled with the entire burden of care.
Money can be a very divisive force in families. Be sure to document everything you do with your parents’ money. Keep notes and, when possible, share the information with the other interested family members. Do your best to be as transparent as possible.
When To Act Quickly
If your parent is no longer competent and lacks the ability to make decisions, you should have them evaluated by a medical professional to make that determination. Finding evidence of fraud, such as joint accounts with a non-spouse or someone whom you suspect to be taking advantage of the parent means you should get them help quickly. Get advice from a financial professional as to next steps and determine how to get your parent the help they need. The Consumer Financial Protection Bureau has guides on what to do if you are managing someone else’s money Guides for managing someone else’s money | Consumer Financial Protection Bureau (consumerfinance.gov). Be proactive, patient and stay involved.
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