As your parents become older, their physical health may gradually start to decline, and that in itself may become your responsibility to manage. However, their mental health may prove even more tricky to deal with especially when you have to take over their finances. With the degradation of mental health, your parents may begin to forget which bills to pay and how much, or even think that they have already done it.
Additionally, they may become more vulnerable to unscrupulous people who are trying to scam them or steal their identity. One of the challenges you may encounter with attempting to take over your parents finances is denial. Most seniors may resist admitting that they are no longer capable of taking care of things the way they used to, and as such, they may be hesitant to hand over the reins in an attempt to maintain their independence.
Here are a few tips you can use to help the transitioning process, both from a legal and moral standpoint.
1. Know When It’s Time To Take Over
Depending on your relationship with your parents, the “right time” may vary. However, it’s always best to try to get ahead of the situation before it even develops. While your parents are still mentally and physically healthy, it’s good practice to have a conversation with them about their financial processes and plans.
If your parents do not live with you, it may be hard to detect a decline in their mental state, but you can look for signs. Check-in on their purchase history from time to time and occasionally check how often they go to the bank. Unusual purchases or frequent bank trips could mean that they are forgetting things or is possibly being the victim of a scam. Also, check-in on important bills that could have serious consequences if they are not paid on time. This would include insurance policies, mortgages, etc. If your parents are starting to forget to make these payments, it is a sign that your aid may be needed.
2. Have the Conversation
Even when you know that its time to step in, it may still be difficult to have a conversation with your parents regarding their finances. This is especially difficult if you are not very close or they are very private. However, it is best to speak to them while they can still rationalize the process and see the benefit of the decision. This would allow them to hand over information and documents willingly which would be simpler than having to get a forced Power of Attorney.
Once you have had that conversation, or several regarding the topic, you will be able to determine what your next steps will have to be. Other things to talk about are future plans regarding their assets and living arrangements. Would it be feasible to stay in their home or an assisted facility? If they choose to stay home, can a live-in professional caregiver be afforded? You should try to delicately talk about their options so that you know what to do when the time comes.
3. Power of Attorney
Sometimes your parents would have already had a power of attorney which may be a friend or another family member. If there isn’t one already in place, you can consider having one drawn up to give you legal authority to make financial decisions on your parent’s behalf. Please note that the power of attorney document can have limitations based on the rights outlined in the document. It can also be revoked by your parents at any time. If not revoked, it will stay in effect until your parents pass away. Another thing to keep in mind is that even though you may now have access to all their finances or have a Power of Attorney, the money still belongs to your parents. Therefore, you should try to involve them in the financial decisions as much as possible.
4. Know Where the Financial Records Are Stored
Some senior are trusting of banks, while others do not trust them at all. Find out where your senior parents store their important documents and access cards. Ask for passcodes, passwords, and keys to safes and safety deposit boxes. Even if they don’t choose to have you take over right now, knowing where these items are will put you in a position to step-in in case of an emergency.
You can also be added a co-signer for the safety deposit box to make it easier for you to access it without needing further documentation. Know the names of all affiliated banks and account numbers. If they still pay a mortgage, you should know which company handles their mortgage and what the payments are. If they have investments, you should have that information as well to be able to manage them and take over if something happens.
5. Make It Simpler
Now that you are aware of where everything is, it may be a good idea to make it simpler. This will be beneficial to both you and your parents, especially if they are still handling some of the finances themselves. If they have multiple bank accounts and brokers, it may be a good idea to consolidate to one or two banks only to minimize having to monitor and deal with multiple institutions. You may find it easier to combine their assets with yours to manage it more efficiently, but this should be avoided where possible as it may lead to a conflict of interest. If anything should happen and it is deemed that you contradicted your fiduciary responsibilities, there may be legal implications.
6. Gather and Organize All Bills and Expenses
Once you have access to all financial-related documents, gather and organize the bills including credit cards, utility bills, mortgage payments, car payments, and any other expenses that may be monthly or have a fixed payment increment. This way you can ensure that your parents’ income is able to cover their expenses and will be paid on time to avoid lapses, repossessions, or disconnections.
7. Medical Care and Insurance
If your senior parents receive government assistance for health care, such as Medicare, Social Security, or Medicaid, you need to check that they are still eligible and will be if they should become incapacitated. Find out if you will require specific permissions or documentation in order to take over the management of their accounts.
Aside from the steps outlined above, you can still help to manage your senior parents’ finances by giving them sound advice. Inform them of ways to avoid being scammed. Inform them of ways elderly people have been scammed in the past, but not as an outright warning but more of an informative story. Let them know that if they come across any person or situation that seems even slightly suspicious, to let you double-check it for them just to be safe.
If you are looking for a secure place to store your hard drives or other valuables, Safe Deposit Center can help. At Safe Deposit Center, we offer a variety of safe deposit box sizes as well as open vault storage to accommodate your secure storage needs. For more information about our secure, private storage facility please visit https://safedepositcenterwa.com/.