What to Do When Your Parents Can No Longer Manage Their Money

My first memory of thinking "something's not right with Uncle Charlie, Aunt Kate or Pop-Pop" was back in the early 1960s; but as a young teen, you were treading on sacred ground to bring up any notice of someone "slipping."

Around the same time, there was a TV show called  “My Three Sons” and one of the characters, Bub--played by William Frawley--could have been a member of my Scots-Irish-American family. At the end of the show's run in 1965, it was obvious to viewers that Frawley was slipping, and it was scary and sad to watch. The show was reportedly forced to let him go because it couldn’t find insurance for him, bringing his 50-plus acting career to an end. He died six months later at age 79.

It’s hard for any child to watch their parents age and lose their mental well being, and many baby boomers are facing the reality of their parents not being able to take care of themselves or their finances.

An estimated 35.6 million people worldwide were living with dementia in 2010, according to the World Alzheimer Report released by Alzheimer's Disease International. The report also predicts dementia cases to nearly double every 20 years.

Unfortunately, there are many scammers looking to prey on the finances of the elderly and mentally impaired. While it’s tough to come to terms with, boomers must be ready to take the reins of their parents’ finances if they are no longer able.

Carlo Panaccione, president of the Navigation Group in Redwood Shores, Calif., is a financial advisor who has worked with various clients dealing with parents suffering from dementia and offered the following tips on how boomers can help manage their parents’ finances:

Boomer: How can baby boomers protect their parents’ money?

Panaccione: Adult children need to stay aware of when their parents start to have problems. Kids don't really want to admit that their parents are having problems with Alzheimer’s or dementia (or any other type of memory-based problem); they chalk it up to a senior moment. While it’s important not to overreact, kids need to say alert--there are a lot of things that can be done to slow down these illnesses.

When it comes to money management, a lot of the protection depends on what boomers’ relationship are like with their parents and their money. Some families use money as a tool, with some it doesn't matter at all , others use it as a weapon and for some, it is driven by fear and not wanting to lose control.

When approaching the subject, make it clear you are solely there to help, don't make it a personality conflict or a control issue. If your parents have a financial advisor explain that you want to be involved in the event that something happens and make sure you have an understanding of what is going on.

If you cannot be objective, hire a professional and make sure he or she is aware that you have concerns. In these cases, the kids have to have special documentation so the advisor can discuss their parent’s financial issues. You can request to be copied on all statements sent to your parents and to have online access to their accounts. You don't want your parents to have a whole lot of money in checking accounts or liquid accounts where it can disappear quickly. You also do not want to have a lot of credit cards and extra lines of credit. The most likely victims of money scams seem to be seniors who do not have a lot of interaction with their children.

Boomer: What is the most difficult aspect of handling your parents’ finances?

Panaccione: Recognizing the weaknesses and the strengths of your family dynamics involving finances.

It is important to keep all siblings involved to avoid problems within the family. It’s hard when parents have gotten to the point where they cannot make decisions at all, at which point the children need to hire an attorney, go to court and get a conservertorship--which means the parents are no longer allowed to manage their own finances.

Boomer: If a parent is having trouble with simple financial tasks are they more likely to become victims of fraud? If so, what are some things you can do to protect them for the future?

Panaccione: Some seniors begin to lose interest in their finances, it is just not that important to them anymore and the forgetfulness can just be a senior moment. Children need to identify whether these “moments” are the beginning of Alzheimer’s or just a drop in the level of importance they place on finances as they age.

Boomer: What rights do baby boomers have to manage their parents’ money if they absolutely don't want you to?

Panaccione: I would break that down into the right or the responsibility.

As far as the right: Frankly, it is their money so things need to be done carefully and diplomatically and sometimes children need to bring in a third party who can be more objective.

Responsibility: If you have gotten to the point where there is a conservertorship set up, then you have the responsibility to step in and manage their finances.

Boomer: What should you do if your parents have been a victim of a scam but won't admit it to you?

Panaccione: You would be surprised how creative these scam artists have become in order to get people’s money. They are really good at pulling on the heart strings of older folks, they don't ask for money right away, they start by asking for advice and involving them in their lives and their problems building a relationship over time. They start by asking for a little bit of money and slowly take more and more--it’s amazing how people can fall for it, but seniors are a high risk of falling into this trap.

Once parents realized they’ve been scammed they tend not to ask for help because of their pride. If they are in trouble, you need to act very quickly and to get professionals involved as a team, not as an adversary. If your parents will not admit to you or your siblings that they have been scammed, bring in someone they can confide like a friend or clergyman—anyone they will not be embarrassed with.

You can get the police or FBI involved but the scammers are typically working from outside the country. If money is transferred from a bank account, even in another country, that is bank fraud and can be tracked. However, some scammers have seniors wire them money; wire services don't fall under the same laws. You can have your parents’ bank not allow wire transfers out of their accounts as some form

Every day, thousands of seniors get ripped off. Many of the scams are clever, devious and downright shocking, and the toll reaches billions of dollars each year. And beware baby boomers: At some point in your future, your children might be looking after you just as you now are looking after your parents, so set a good example.