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Helping Elderly Parents Manage Financial Matters

While the age it begins is different for everyone, at some point during the senior years we start to lose some of our cognitive capacity. The problem is, that’s when our portfolios likely reach their peak: just when we’re not as good as we used to be about making decisions.

U.S. News & World Report’s recent article, “How to Help Aging Parents Manage Portfolios,” says that, at some point, adult children may believe it’s time to help with responses from the subtle (just a few suggestions) to the intermediate (monitoring accounts) to the extreme (gaining control from their parents). How do you know when it’s the right time?

These are delicate subjects, and it can be a hard to speak with aging parents about their money and their potential to be the targets of scams. Loneliness and depression raise the odds of financial exploitation. Changes in social circumstances, like the loss of a spouse, can greatly increase risk and vulnerability.

Right after losing the ability to drive, the biggest loss of independence a senior citizen experiences is the ability to handle their own finances. Just a few mistakes can wreck a portfolio’s ability to cover the parents’ remaining expenses or provide the bequests they’d hoped to leave to family.

While control issues make many uncomfortable, hurt feelings and hassles are in many cases much worse, if problems are left to fester. The first step is to be aware of signs of mental decline—don’t jump to conclusions each time a senior struggles for a word. It’s not good to have your parent feel like she’s under a microscope and being constantly monitored.

If there are past-due notices all about, or if there’s a lot of charity mail, it might be a sign of a problem handling finances or dealing with day-to-day financial matters.

Start that discussion gently, by talking about your own finances to help put the parent at ease. Make it casual, not a confrontation with a formal sit-down. Do it one-on-one.

If the first steps raise concerns, the child can simply offer some suggestions to make things run more smoothly, like setting up automatic cash transfers from the parent’s investment accounts to a bank account, and automatic bill payments from the bank. Assisting with the parent’s tax return, can also ease the parent’s burdens and allow the child to keep on top of things. In addition, the child can register with the bank to get copies of bank and investment statements, so that he can monitor if there are any suspicious withdrawals or failures to pay monthly expenses.

If the parent is showing distinct signs of weakened abilities, it might be time to go further and ask for access to the parent’s accounts. Make this an offer to help, not a takeover. That way the child can monitor financial accounts.

You can also have your parent designate you as their agent in a durable power of attorney, which allows you to transact business on their behalf.

At some point, an elderly person may not be competent to handle financial affairs at all. Poorly-advised investments or susceptibility to scams are a definite sign of vulnerability. The adult child can petition a judge to make the child the parent’s conservator or guardian to take charge of finances and other matters involving the parent’s welfare. It is an adversarial and complex proceeding with attorneys and medical experts.

Don’t wait until someone has scammed your trusting dad into investing all of his money into a scam. Take a kind and gentle approach but do know when it’s time to take control.

Reference: U.S. News & World Report (October 22, 2018) “How to Help Aging Parents Manage Portfolios”

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