It’s no secret that the elderly often have trouble managing their finances. After all, they’ve been working and supervising family’s finances for decades and may not be as up to date on the latest technology or trends as younger generations. This can lead to many problems, like scamming or falling victim to fraud.
One thing you can do to manage your elderly parent’s finances is asking them about it. This may seem simple, but having an open dialogue with your parents about their finances is essential.
Start a Dialogue with Your Parents About Their Finances:
Talking to your parents might be difficult, but it’s worth it to ensure their financial safety. Here are some tips on how to start the conversation:
- Ask them general questions about their finances. How they’re doing with their bills, or if they’ve been saving for retirement?
- Then, ask more specific questions about their income, debts, and assets.
- Talk about your finances and what you do to save money or make wise investments.
- Ask them about their goals for their finances. Do they want to save for a rainy day? Are they looking to travel more in retirement?
Once you have a good understanding of your parent’s financial situation, you can start to help them out. Whatever you do, just ensure you’re doing it in their best interests.
Legal Tools You Need in Handling Your Parents’ Finances
If you’re ready to assist them, you may need to put it into writing. Here are some legal resources that can help you with handling your parent’s finances:
Durable Power of Attorney (Property and Finances)
This gives you the authority to make decisions about property and finances on your parent’s behalf if they become incapacitated. A power of attorney defines your powers as the agent: write and deposit checks, pay bills, buy or sell property, and file taxes.
Let’s say your parents suffered from a car accident and are now in the hospital. As their durable power of attorney, you can sign the paperwork to sell their car so that you can pay for their medical bills.
Or, let’s say you need to install a home elevator in your home for their accessibility and better household management. You can use their power of attorney to sign the contract and make the purchase on their behalf.
Before you can start using the durable power of attorney, you need to give notice to any interested parties. This includes your parent’s financial institution (e.g., bank, broker), creditors, and insurance companies.
Signing Checks and Documents on Your Parent’s Behalf
If your parent cannot sign checks or documents, you may be able to do it for them. This is called “signing by procuration.” It allows you to sign your parent’s name on their behalf as long as you include your own signature and indicate that you’re signing on their behalf.
To illustrate, let’s say your parent needs to sign a document but cannot physically do it. You can sign their name on the paper followed by your signature and write “by procuration” next to it.
Checking Account Co-Signer
As a co-signer, you’ll be able to write and deposit checks, pay bills, and manage the account. This is a good option if your parent can still handle their finances but could use some help. For example, suppose they’re having trouble keeping up with their bills. In that case, you can help by paying them online or setting up automatic payments.
Joint Tenancy with Right of Survivorship
This allows two or more people to own property together. When one owner dies, the surviving owner(s) automatically becomes the sole owner of the property. For example, your parent wants to add you as a joint tenant on their bank account so that you can help manage their finances. If your parent dies, the account will automatically become yours.
If you want to avoid probate, this is a viable alternative. Probate is the formal procedure for distributing a person’s property after death. It may be costly and time-consuming, so avoiding it is almost always preferable.
Durable Power of Attorney (Health Care)
This includes medical treatment, mental health treatment, and long-term care decisions. For instance, your parent is in the hospital and can’t make decisions about their medical care or treatment.
If they suffer from coma or dementia, the durable power of attorney for health care will allow them to decide about their long-term care. This includes whether they should be placed in a nursing home or assisted living facility. This also gives you the power to see the medical records and make decisions about the care they receive.
All in All
As our parents age, it becomes increasingly vital for us to help them manage their finances. This can be a difficult conversation to have. Still, it is essential to ensure that they can maintain their standard of living as they age.
By helping our parents understand their finances and providing them with support, we can help ensure that they can live comfortably in their later years. Ultimately, assisting our elderly parents with their finances is an act of love and caring that can make a big difference in their lives.