Transitioning Responsibility for Your Aging Parents'
Finances
April 2010
Convincing senior parents to turn over management of their bank accounts can be
more challenging than taking away their car keys
As you may have already learned,
convincing senior parents to turn over management of their bank accounts can be
more challenging than taking away their car keys. After all, Mom and Dad have
been role models on the importance of saving money and investing.
Their repeated advice to you: Pay your bills as soon as they arrive, but check
them for accuracy. Anything left over after you pay your living expenses goes
into savings accounts or conservative investments.
Red Flags. However, it is not uncommon for the children of elderly parents to
begin seeing some serious red flags in their parents’ fiscal behavior, as they
seem to no longer be living up to their own sage advice.
The “every penny counts” mother mentions bounced checks and overdraft fees. Her
electricity was shut off because she forgot to pay the bill for two months. A
review of her checkbook shows that she mistakenly paid the same insurance bill
twice.
Or the historically frugal father has uncharacteristically paid $2,500 to
sweepstakes entries over the last year and written six $100 checks to an unknown
charity.
Those are scary occurrences for adult children who can, for the first time,
envision their parents making a devastating financial move and losing
everything.
Compromise. If you find yourself in such a situation, and your parents are
reluctant to cede control, suggest starting with the “unofficial” role of
financial monitor. That might involve a monthly review and/or reconciliation of
the parent’s bank statement, and perhaps online account monitoring.
Gradually, as your parent gets more comfortable with sharing control, you can
move into the more official role of money manager.
A more formal step is to enlist the help of an estate planning attorney to draft
a Durable Financial Power of Attorney. This legal document allows a loved one to
handle a person’s finances when he or she no longer can. It can be written to go
into effect immediately or upon a doctor’s certification that the parent is
incapacitated.
Outside Help. Another solution for some families is to hire a licensed and
bonded private fiduciary to pay the bills. There is also a growing body of
professionals who help seniors without any family available to help, or whose
loved ones are overwhelmed by the prospect of dealing with a senior’s financial
problems.
Adapted from the Daily Plan-It newsletter. Hoopes,
Adams & Alexander, PLC, is a Chandler, Arizona, law firm offering services to
Phoenix-area clients in the areas of estate planning, entity formation,
commercial and real estate transactions, and civil litigation. |
