Dealing with your parent’s finances is stressful and emotional. If you deal with the issues in a business-like manner, you too can get through this trying time.Â Many people must deal with raising their own families and supporting their parents as they get older. This also includes managing your parent’s finances. It often comes as a shock to find out that your parents cannot manage their finances any longer and need your help. They may not even realize that they need your help and harbor some resentment at having their personal affairs poked into.
Gather All Information about Your Parent’s Personal Affairs
We have gone through this several times with my own parents and my spouse. I can tell you that for us it was a gradual thing for the most part. Eventually, we had to take over everything when it became obvious that they could no longer take care of their own finances. We thought we would list the things you should review and start tracking. You need to begin by gathering and organizing all of the personal financial information included in the following list:
- Bank and investment statements
- Birth certificates
- Insurance policies
- Investment policy statements
- Unpaid bills
- Tax information
Managing Your Parent’s Finances – Power of Attorney
The degree of control and involvement is limited unless your parents have written and signed a power of attorney. It designates someone able to control their financial and health issues while they are still alive. Without a power of attorney or sometimes referred to as a living will, even children cannot gain access to bank accounts, tax information, etc. Here is a list of the things that you should be able to gain access to with proper power of attorney:
- Access safe-deposit boxes
- Buy, manage, or sell real estate and other property
- Exercise stock rights
- Handle banking transactions
- Manage tax returns and filing for government benefits
- Transact in security markets
- Update or renew insurance policies
- Make health-related decisions based on their behalf
Summarize all Financial Information
It is important to summarize the basic financial situation of your parents relative to being able to fund all of their expenses. You will need to assess what assets they have and what monthly and annual expenses they have. Include basic living costs and medical care that they may need.
Once you have this information, you will be in a position to know if there are financial issues that you need to deal with. You will know whether steps should be taken to conserve cash or reduce expenses. This is a stressful and traumatic time for both the parents as well as the children who are usually the people who have to make all of these decisions.
Medical expenses are a huge cost. It is important to ascertain what coverage by insurance policies and your government’s medical care and what is not covered. You may be making decisions about support devices. This includes wheelchairs and home care with nurses and homemakers coming into full-blown nursing residences. With your parent’s doctor, you will be able to make decisions on the appropriate level of care and determine the cost involved as well.
The emotional part of this entire process is quite difficult, especially if are complications by any of the following:
- Parental resistance
- Emotional reactions on both sides
- Lack of legal documents such as a living will
- Differences of opinion between siblings
- Insufficient funds to deal with the health-related issues
The best advice we can provide is to take things slowly and not overwhelm everyone. Discuss the issues over time and let people come to their own conclusions as long as an emergency does not develop. In the worse case, you may have to get a court order if there is no living will. If there is a disagreement between siblings as to what steps to take, legal steps may be needed.
Never Take Advantage
The last point we want to make is to emphasize that you have a very important job to do, and one that is not compromised. Many seniors are taken advantage of by their children and other relatives. You should never be dishonest and you should never take advantage of someone when they are vulnerable least of all your parents. If you see someone doing this sort of thing, take action and notify other family members. If necessary, call in the authorities.
having been through this situation with my own parents I can say that managing your parents finances can be a really difficult thing, we found that we gradually took over his finances and this seemed to work best.