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Managing your senior parent’s finances

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Don’t let fear of an awkward conversation deter you from talking honestly.

 

Money ranks right up there with the birds and the bees when it comes to uncomfortable parent-child subjects. When the talk involves taking over your parent’s finances, the conversation can progress from awkward to downright hostile.

Don’t let fear of a difficult conversation keep you from talking honestly with an aging parent about handling their finances. If left unmonitored, that money could go into the wrong hands. One of the few studies on elder financial abuse, a 2010 Investor Protection Trust Elder Fraud Survey, said that one in five Americans over age 65 had been victimized by financial fraud.

When to step in

Elliot Omanson, senior advisor and president of Sage Financial, a financial planning firm based in Shawnee, Kansas, says children should take note if a senior parent shows signs of forgetfulness, if they misplace bills and other documents and if they can’t retain information during a conversation. “Forgetting or misplacing something every couple months isn’t a problem,” says Omanson. “But if you have to explain something multiple times in five minutes, it’s a red flag.”

Here are some additional signs that your parents may need financial help:

• Unopened mail piles up in the house.

• They start getting calls from creditors.

• They’re making a lot of expensive new purchases.

• They complain about not having enough money.

• They have difficulty paying bills or balancing the checkbook.

How to broach the subject

Everyone reacts differently during financial discussions. Generally, however, you’ll avoid conflict when you focus on the positive and emphasize your own concerns rather than your parent’s mistakes.

Omanson suggests pointing out the benefits of turning over financial control. For example, a child could say, “I’m going to take this off your plate so you don’t have to worry about it.”

When his grandmother needed help, Omanson set up most of her bills to auto-pay with a credit card. She earned points she could use for shopping. “She liked that idea because she got a benefit,” he says. “You have to explain they’re getting more of something they enjoy.”

However you approach it, it’s important to treat your parent as an equal.

How to stay organized

The first step in taking over your parent’s finances is to find out what’s entailed. Where do they keep their records? What accounts do they hold? What are their monthly expenses? What income do they receive and from where?

While you’re discussing financial records, find out if your parent named a Durable Power of Attorney (POA). A POA allows your parent to appoint an agent to make certain health, legal and financial decisions on their behalf. You’ll need this POA to have your name added to your parent’s checking and other accounts, which is one of the next steps in the process.

From there, you can set up automatic bill pay through their checking account and/or credit card companies, or use old-fashioned paper checks. Online accounting software such as QuickBooks and Xero help you keep track of money coming in and going out.

Whatever system you use, keep your parent informed so she feels she has some authority. Also, make sure siblings can access basic records, whether it’s through online access or by reviewing a binder full of paper records. “Transparency is one of the best ways to avoid animosity between siblings,” says Omanson.

The bottom line

Don’t wait until crisis hits to talk to your aging parent about money. With honest dialog, you can balance your parent’s books and maintain financial and family harmony.