A time will come when age begins to catch up with your parents and they will need help with managing their finances.
Even if your parents don’t want to feel dependent, when you sense that they need your assistance, you can approach the issue with sensitivity and extend your support for the management of their finances.
Here are five ways to get started on this important issue of an aging parent’s finances.
Initiate the conversation early
Your parents may not immediately need your help with the handling of their financial matters, but it is prudent to begin the conversation early.
Approach the issue of who will manage the financial responsibilities when they are no longer able to do it.
According to the National Institute of Aging, parents should designate a trusted family member by providing their advance written consent.
This will enable you to discuss your parents’ financial issues with financial advisors, doctors, and Medicare representatives and carry out timely financial planning.
Inventory all pertinent legal and financial documents
Prepare a meticulous list of your parents’ important contacts, bank account details, locker numbers, and the locations where they may have stored documents, such as wills, property deeds, insurance policies, and birth certificates.
Verify that all information and documentation is accurate, up to date and valid, and all their accounts continue to be in good standing.
If some key information or document is missing, damaged, or needs changes because of a change of circumstances, this is time to apprise them of it and help them do what is necessary.
Consider executing a power of attorney
A competent adult can sign a document called power of attorney to grant another individual the authority to make decisions on their behalf.
Power of attorney for a specific purpose may cover medical, financial, or other decisions, and it may be designed to give limited or more sweeping powers.
When your parents execute a power of attorney with you, it will legally empower you to make key decisions when they are unable to.
An attorney handling elder law matters can help you draft an appropriate power of attorney according to your needs.
Document your actions and keep others informed
Transparent communication will help you avoid misunderstandings or controversy within the family which could be hard to do if you already have issues with one of your parents, for instance.
Make sure you keep your parents, siblings and any other loved ones involved with your family informed about your actions.
No matter how noble your intentions may be, if others are kept in the dark it can raise questions about your motives.
Managing the finances of aging parents is a lot of work, and you can enlist the support of family members or at least keep the lines of communication open.
Do not mix your own finances with your parents’ plans
While it may appear like a convenient or cost-effective thing to do, it is never a good idea to group your parents’ finances with your own.
Keep them separate throughout. Using your parents’ money for your purposes or your own money to help them out is usually a slippery road that should be avoided.
It’s best to keep your personal funds and assets separate. Do not lose sight of your own financial goals and retirement savings while you focus on helping your parents.