Five Tips to Help Manage Your Parents' Finances

Get Talking

First things first: Even if your parents are, in your opinion, in a financial mess, don’t go approach the topic like a bull in a china shop. Be respectful. After all, they are your parents! While they changed your diapers, you shouldn’t be afraid of starting this very adult conversation. If you’re seeing signs that they’re confused or overwhelmed by their finances — bills piling up, collection calls, overdrafts — they might welcome a little extra help. Talk it out! That way you know you’re all on the same page before you start taking action.

 

Get Organized

Once you’re all in agreement on goals and action steps, gather all the pertinent documents in one place to organize them. This includes bank statements, investment accounts, real estate paperwork, business receipts and tax returns. Invest in a filing cabinet if necessary. As you’re all sitting down together, it’s not a bad idea to create a budget based on realistic expectations of income and expenses. Once it’s all down in black and white, you may discover that their “dire financial situation” is really a matter of cutting back on opulent gifts for the grandkids or cancelling gym memberships they never use.

 

Get on Track

Once all the paperwork is in place, start going through the pile. Set aside any bills that are past due or unpaid, and pay them as soon as you can. If the bills are all caught up, it’s time to go through financial statements and make sure that a Nigerian prince from the internet isn’t scrambling your parents’ nest egg. If you see a suspicious purchase or monthly expense, follow up on it. Now’s also the time to check retirement investments and ensure they’re in line with your parents’ larger financial goals. Don’t be afraid to reach out to a financial planner for help — some of this stuff can get confusing.

 

Get Legal

If your parents aren’t capable of managing their finances or they’re showing signs of dementia or Alzheimer’s disease, you may need the legal authority to handle financial work on their behalf. You may need a limited power of attorney to handle your parents’ finances on their behalf and with their permission. Depending on how far the dementia has progressed, you might consider a conservatorship — a legal relationship that puts you firmly in the driver’s seat. If you’re considering either a limited power of attorney or a conservatorship, talk to an elder law attorney to see which option is right for your family. 

 

Get Safe

It’s a sad fact: Older people are often the targets of scams and theft. But your parents don’t have to be victims. You may help them avoid getting bamboozled by increasing awareness of 12 common scams targeting seniors and by taking some basic safety precautions. For example, make sure they know that the IRS and U.S. Department of the Treasury will not call them to ask how they would like their tax return or their 2020 Coronavirus Economic Impact payment delivered. Additionally, these agencies will not ask you for banking information, credit card information or their social security number over the phone.

 

This information is not intended to provide and should not be relied on for tax or financial advice. You should consult your own tax, financial, legal and accounting advisors.

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