Managing Finances for an Elderly Loved One

Aging parents often reach a stage when they need help managing their finances. The best time for a family member to start helping an elderly loved one manage their financial affairs is well before the assistance is actually needed. These five tips will show you how you can help.

1. Establish a Durable Power of Attorney

An elder law attorney can help establish a legal power of attorney for the family member who will monitor finances.

While any lawyer can set up a durable POA, an elder law attorney is the smartest choice for a senior citizen. Our expertise extends to helping an elder decide which family member to name as the durable POA. We can also explain what a legal POA is allowed to do on behalf of their elderly loved one.

A power of attorney is an essential element when helping to monitor and manage an elderly loved one’s financial affairs. The person who is assigned power of attorney can act as a fiduciary who can make financial decisions on an elder’s behalf. Banks and investment companies, however, will not carry out a family member’s instructions unless they have legal documentation of a power of attorney.

Your elder loved one must be fully competant to grant power of attorney. That’s why it’s smart to set up this legal document while your loved one is in good health and sound mind.

2. Set Up a Joint Bank Account

You and your elderly loved one can set up a joint bank account. A joint bank account allows either account holder to deposit or transfer funds. If the bank account includes checking, either party can write checks.

The best time to set up a joint bank account is long before it’s needed. That way, if a medical emergency or condition prevents your loved one from paying bills, you’ll be able to cover this task.

3. Take an Inventory of All Financial Accounts

Once a durable power of attorney is established, that person should take an inventory to locate and monitor all financial accounts. These can include bank accounts, investment accounts, retirement accounts, pensions, and health savings accounts.

The inventory should note account numbers as well as any access information for digital accounts. A best practice is to create a spreadsheet to record financial information and to keep the document secure with a password.

4. Corral Bills by Going Paperless

Elderly loved ones often need help managing paper statements and bills. Although it can be a lengthy process to set up paperless accounts, it’s worth the effort to make sure bills and statements are not overlooked.

Checking online statements is a task that can be shared among family members. For example, one family member might be assigned medical accounts and another might be assigned to monitor utility bills.

5. Be Transparent

Family members who monitor an elderly loved one’s financial accounts must do so in a fully transparent way. One tip from the AARP regarding transparency when managing someone else’s money is to keep written documentation of all expenses paid from a joint account. The AARP also recommends:

• State the reason for all expenditures.
• Maintain an open-book policy for other family members.
• Never borrow from the joint account.