For elderly parents, once simple tasks become harder to accomplish. One of those tasks is financial management. Without help, a parent can become confused and derail his or her retirement plan. Bills go unpaid. Dividend checks get lost. Duplicate checks to the same charity or vendor begin to appear. The situation begs for children to step in and organize the parent’s finances.
If your parent is in this situation, you need to take these five steps:
1. Inventory Assets and Income. Get a clear picture of the parent’s assets and income. Start by collecting the latest statements from banks, stock brokers, deeds, and the U.S. Treasury. Create an Excel spread sheet of the date and totals of each account. Create a separate listing of the name of each financial institution, the contact information of the key person at each financial institution, the account numbers and any online usernames and passwords.
2. Get a Durable Power of Attorney and Use It. Have your parent sign a Durable Power of Attorney to manage his or her finances. It allows you to talk to the parent’s stock broker or banker. Don’t wait until it’s convenient to get a Durable Power of Attorney. If your parent is unable to sign the Durable Power of Attorney or acknowledge that it was their free act and deed to sign it, you may lose the power to help them with their finances without court intervention. It can take several weeks to get it signed. Visit the parent’s lawyer to get it signed. Have 4 originals signed because most financial institutions will want to see the original. Once it is signed, go to the financial institution with the parent and present the Durable Power of Attorney to the financial institution. The banker or broker will feel confident that the parent wants your help in managing their finances if your parent tells them so. If it is not possible to visit the financial institution with your parent, have your parent call the banker or broker to assure him or her that your help in managing the account is desired.
3. List Their Expenses. Everyone has regular, periodic expenses that require payment. You need to create a listing of each household expense and when it comes due. Include the name and contact information of each service provider, the usual amount or payment range, the monthly due date, and any account numbers.
4. Put Everything on Automatic. You can eliminate lost and bounced checks by arranging direct deposit of income from annuities, dividends, and bond interest. You can avoid late charges, utility shutoffs and lost services by paying mortgages, utilities, condo fees, heating oil and other expenses with automatic bill pay through your parent’s checking account.
5. Report Regularly to the Whole Family. If you have siblings, they will likely want to know how you are managing Mom or Dad’s finances. Financial management rarely occurs in a vacuum. Your parent and siblings may have suggestions on better ways to meet your parent’s needs. Keep good records and consult them. Initially, report to your parent and siblings in writing at least every 3 months. Outline what you have done for them financially. Send it to siblings by e-mail; go over the report with your parent in person. Once most of the above steps are completed, you can report less regularly.
It is not easy helping a parent manage his or her finances. But if done thoughtfully and reported regularly, you can make a meaningful difference in the future of a parent and maintain good relations in the family.
