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Managing Parents’ Finances

Manging parents' finances. Senior woman talking with her daughter at home.

Taking Over Parents’ Finances

As your parents age, managing their finances may become increasingly difficult. However, do not be discouraged, as there are ways for you to step in and help ease this burden for them. It is important to approach this situation with care and adequate knowledge of the legal aspects involved in this process. It would help if you also considered some of the challenges that may arise, including missing information, difficulty with communication, and effectively managing their given budget. Senior living communities may be of help in this situation as they provide residents and their families with useful resources and options for living that make for the best use of their finances.

Understanding Your Parents’ Financial Situation

The initial step in the process of taking over your parents’ finances is fully understanding their financial standing. You should first begin by gaining access to your parents’ documents and accounts that are needed to view and manage their assets. Some of these may include:

  • Bank accounts
  • Loans
  • Legal documents (birth certificates, insurance policies, deeds, and wills)
  • Account information for regularly occurring bills
  • Investment accounts
  • Private financial obligations

For some, these documents and accounts can become daunting as the list grows depending on your parents’ financial situation. This can make it difficult for you to effectively organize and understand what you are working with. In this situation, you have the option of reaching out to a skilled financial advisor or professional to help create an itemized list that is easy to understand and navigate. 

Once you have gained access to these documents and accounts, you will then have a full understanding of your parents’ financial life, including their assets, debts, and regularly occurring bills and other financial obligations. This will give you an idea of what will be expected of you as you begin managing their finances, as well as help you recognize any areas where finances can be simplified or put to better use to serve your parent in the best way.

It is important to note that once you have access to this information, you should make an effort to store it in a secure manner that does not make it vulnerable to theft.

Legal Considerations

Although the authority of your parents is held in high regard, it is unfortunately not the only form of authority you will need as you begin to take on their finances. One of the most important tasks you will be faced with is gaining legal authority over your parents’ finances so that you do not run into any issues as you make financial moves on their behalf. In this situation, there are two forms of legal authority that you may obtain, including a power of attorney (POA) and a guardianship. 

Although some parents hold a living trust that provides their named beneficiaries access to some of their financials, it is quite limited and should also be accompanied by a power of attorney, also known as a POA. A POA is a document signed by a competent and consenting adult that grants another person, in this case, the child, the ability to make decisions on their behalf. It is important to understand that there are different types of POAs, as well as varying degrees of permanence. You should aim at receiving a financial POA that is complete, rather than one that has limiting circumstances. This will ensure that you do not run into any issues as you continue to manage your parents’ financials. 

In some cases, a POA cannot be granted, as the parent may be considered incapacitated. This is when it would be wise to obtain legal guardianship over your parent so that you can take over their financial decisions, as well as other decisions that may impact their life. To begin this process, you will need to file a petition with the court, submit all of your state’s required documents, and provide a letter of competency from your parent’s physician. It should be noted that obtaining guardianship can sometimes turn out to be a more grueling process if there are disagreements amongst family members regarding the guardianship.  If possible, you should make an effort to open the line of communication regarding the financial future of your parents so that you can work together to create an easy, mess-free plan. 

Approaching the Conversation with Your Parents

It can be quite difficult to navigate the difficult conversation of taking over your parents’ financial situation, as it highlights the reality that your parent is reaching an age that comes with some challenges and necessary changes. However, starting the conversation early and with great compassion and understanding can help make this process feel comfortable for everyone involved.  

Creating an open line of communication is key in this process, as it allows both parties to feel confident and comfortable as they move forward. This communication should begin early to ensure that there is enough time to consider all of the information and make necessary changes or adjustments. However, it should not be a conversation that happens in the spur of the moment. Instead, this is a conversation that should be handled with care, planned in advance, and in an environment that encourages conversation. 

This can be a lot of information and tasks to manage on your own. However, some resources can be used to help organize and even manage some of the financial, legal, and personal aspects. Mediators can be used to effectively approach the conversation surrounding your parents’ finances, financial professionals can help make sense of the information given, and legal professionals can guide you as you obtain the authority needed to act on behalf of your loved one.

Managing Ongoing Financial Needs

As with most people, your parents will most likely have ongoing financial needs like bills that need tending to continually. You should ensure that you have a system set up, like autopay or reminders, that will keep things running smoothly. You should also have a system in place that keeps your parent’s assets secure, as seniors are a high target for fraud and scams. This should be brought into the conversation with your parents to ensure that they are painting security over their financials, and you should store all of your accessed information in a way that protects it from outside threats.

Once a plan has been made between you and your parents, as well as any other siblings or family members that may be involved, it is then vital to maintain consistent communication with each other as progress is made. Although you will be taking over your parents’ finances, it is important to still allow them to take part in the decision-making process as much as they are able. Especially in the case of a power of attorney, as opposed to guardianship, it is crucial that the parents maintain delegation powers while the family members act as supporting figures until instructed otherwise. This will ensure that the parent does not feel as though they have lost control or authority over what is theirs.

Lastly, it is important to communicate and document any changes being made to your parent’s accounts so that there is a traceable trail. This allows for both you and your parent to be up-to-date on their financial situation. This also ensures accountability in the case of miscommunication or disagreements. Maintaining transparent and open communication makes this process smooth and comfortable.

Get the Process Started

Taking over your parents’ financial situation can seem like a daunting task. However, there are many ways to ensure that this process goes smoothly so that you do not skip a beat in ensuring that your parents’ financial standing remains stable as they embark on their new journey to simpler living. There are many things to look forward to once these challenges have been ironed out. Senior living communities are a great place to start when you are seeking resources, support, and even the bright side of growing old. At the Senior Resource Group, our team of professionals is ready to support you as you navigate the ins and outs of senior life for your parents. We are ready and available to help guide you as you tie up loose ends, like financial planning for seniors, and plan for a bright and fun-filled future for your parent in a senior living community. Visit our website to view all of our resources and offerings and find the community for your loved one today.