Stepping in to help your aging, or declining, parents with their finances takes time, patience and persistence.
There are financial documents to find and organize, checkbooks to balance and monthly bills to be paid. Plus, you need to make an overall assessment about whether their finances will be able to support them and for how long.
5 Tips From the Pros
Below are five recommendations from money experts if you find yourself needing to manage one or both of your parents’ finances. They can be especially helpful if the parent who managed the household’s money for years is ill or incapacitated, since the other may be at a loss about what to do.
1. Find the financial documents. Look for your parents’ essential documents in desk drawers, safety deposit boxes and filing cabinets. You need to find their bank and investment statements including retirement accounts; insurance records; the title to the house and car as well as medical and doctor records, especially if paying for medical expenses is a growing financial concern.
It’s worth spending two hundred bucks or whatever it costs to talk to an attorney, hopefully it’s your parent’s attorney.
— Nola Kulig, financial planner
“Take an inventory of what exactly they have and a balance sheet of what’s going to come in or go out.” says Skip Fleming, a financial planner at Lodestar Financial Planning in Colorado Springs, Colo.
2. Check their cash flow. The checkbook register and bank statements can answer important questions: Are they keeping up with their bills? Are they paying the same bill twice, or not at all? Have they made a number of repeated purchases for items they may not use? Are they giving to their favorite charity every time a telemarketer for the organization calls?
Fleming and his brother are helping their widowed mother with her finances. Fleming offers strategic planning advice while his brother, who lives closer to his mother, stops by twice a month to help pay bills. “She still to this day handwrites checks for everything,” Fleming says. “And my brother goes over to her house a couple of times a month and they go through it together.”
3. Streamline spending. Check for ways to trim and simplify your parents’ finances. Do they have credit cards they never use? A cell phone they don’t need or a very expensive calling plan?
“Try to streamline stuff as much as possible,” says Fleming, whose mother had cable add ons she didn’t need and a cell phone she didn’t use.
4. Divvy up the job with your siblings. “I’ve seen it work very well with someone doing the day to day and someone else doing the more strategic or long range things,” Fleming says.
If neither you nor your brothers or sisters feel competent to take control of your parents’ investments, reach out to a financial adviser.
5. Sign a durable power of attorney. Discuss with your siblings whether you, one or more of them, or some combination will act as durable power of attorney, making financial decisions for your parents when they cannot. (Find out precisely how a durable power of attorney works in the state where your parent lives or will be living if he or she will soon relocate.)
“It’s worth spending two hundred bucks or whatever it costs to talk to an attorney, hopefully it’s your parent’s attorney,” says Nola Kulig, a financial planner in Longmeadow, Mass. Find out “what are you legally obligated to do and what are you not legally obligated to do,” she says.
Kulig, who managed her mother’s caregiving and her finances long distance before moving her mom closer to her, paid for such a session with an attorney on the advice of a social worker.
Carolyn Rosenblatt, an elder law attorney who wrote The Family Guide to Aging Parents, suggests getting a power of attorney with your parent’s bank as well, giving you permission to make banking decisions for your mother or father. “Most banks have their own forms for power of attorney,” Rosenblatt advises.
When Parents Are Resistant to Help
If your parents seem unwilling to open up about their finances, you might offer to help them just with their taxes or see if they’ll let you help clean out a filing cabinet, suggests Anna Sergunina, a financial planner in Burlingame, Calif. “Offering to organize all the paperwork will get you through the back door,” Sergunina says. From there, you’ll get a lot of ideas of what needs to be done.
For more tech-savvy parents, Sergunina recommends offering to organize their online passwords or setting them up with a smartphone budgeting app.
Just remember: You are offering your parents assistance, not taking over their lives. Offer your help gently and with respect. “You’re really working on behalf of someone else,” Kulig says. “You’re not telling them what to do. That’s very important.”