Caring for aging parents is tricky. As parents get older, adult children often worry about their ability to manage their finances. It's all too common for seniors to miss bills, spend all their money or become victims of scams.
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If a parent is struck by a sudden illness, it may even be difficult to get their bills paid and make arrangements for care. Someone has to step in.
Ideally, adult children prepare by talking with their parents early in the game. They know where everything is, including the phone numbers of legal and financial professionals and paperwork to cover all contingencies.
In real life, however, parents often resist their children's attempts to help.
"Most people are reluctant to give up control," says Harry Margolis, a Boston elder law attorney. "They're hanging on as hard as they can."
Some children back off. It is their parents' money, after all. But if parents are in danger of not having their needs taken care of, or may be left destitute after a lifetime of saving, giving up is not an option.
If your parents need help with money management, or if they may need it soon, here's what to do.
While Parents are Still in Good Health
Marie McNabb, a Seattle CPA, therapist and counselor, advises families to get involved before their parents' health and mental state requires them to. Start making money something you can talk about comfortably. "To be a little more communicative as a family could lay a good groundwork," she says, "so when the health starts to decline, it's not so out of the blue to talk about these things."
Find out where important papers are kept and if wills and other documents are up to date. This is also a good time to make sure your parents have good tax and legal advisers, and that legal documents are in place. "What you hope for are parents who will plan ahead in terms of setting up a power of attorney and a living trust," Margolis says.
At the First Signs of Problems
When Mom or Dad start forgetting things or become confused, go one step further. "Sit down and review things with them like investments. Perhaps get online access to see how the accounts are doing, review tax returns, check on insurance. Start to get an overview of where things stand," says McNabb.
"Make sure you're trying to be very respectful and not take over," McNabb says, "but try to keep a discussion going about the decisions that are to be made."
When occasional oversight is not enough, you may have to start writing the checks for your parents. If possible, do this at their house. Keep them involved as long as possible.
This is also a good time to get to know your parents' financial contacts -- the bank, landlord or tenants, social worker and accountant.
Eventually, you may have to take over completely. "The money becomes much more of a worry than a practicality," McNabb says. "Then you can cut down on the amount of information you are sharing. Just let them know everything is OK. Say, 'I'll send you a copy of what I've done this month.'"
Far from being upset, some parents find it a relief when they can stop worrying about money.
What if a Parent is Spending Recklessly?
Some seniors start uncharacteristically spending all their money, or even money they don't have.
For example, a depressed parent watching QVC all day may order dozens of porcelain figurines and not even remember doing so.
"You have Home Shopping Network cases, people signing up for Canadian lotteries," says Margolis.
It's helpful to have two or more people try talking to the parent about money not lasting forever and the importance of watching expenses. It's better if it doesn't all come from one person.
If that doesn't help, or if your parent is charging things on credit cards he or she can never pay back, you have a responsibility to intervene. You can call the credit card company and alert them to the problem. You might put extra cards away or suggest closing accounts.
It's hard to know when to actually take the checkbook or credit card away. McNabb says, "Your gut really knows when it's the right thing to do, but emotionally it's hard."
What if Dad has a temporary health crisis?
You should definitely have power of attorney for your parent. Margolis says, "I like a revocable trust. Let the child step in while the parent is competent. Tell them where the accounts are and where everything is and facilitate putting the child in charge. Parent and child can be co-trustees, so it's not like one person is taking over."
When the parent recovers, things go back to the way they were before.
Some parents willingly sign a power of attorney, but never let the child use it. Others don't get that far. What happens when parents need help but don't want to take it?
"Some techniques are practical and some are legal," says Margolis. "Taking control can be a gradual thing. Sometimes what children do is a little bit of subterfuge." For example, with a spendthrift parent, you may remove a credit card or make sure there are not unlimited funds in the checking account.
Option of The Last Resort
You may have to go to court if you can't prevent a parent's overspending, and you have no option but to take control of their finances without their consent. The process is different in every state. Basically, with the help of an attorney you get a court appointment to take over your parent's finances as guardian.
Use the court system to take over your parent's finances only as a last resort. The legal fees can run into the tens of thousands of dollars, and the process can cause anger. You might avoid having to go to court by using mediation or negotiation, or by just putting it off a little longer. Then, when the parent finally admits he or she needs help, you can step in and take the burden of managing finances off his or her shoulders -- without causing mistrust and ill will.