Money. Even under the best of circumstances, it’s a subject few people want to discuss…even with individuals in their own family. But as people age, it becomes important—and sometimes necessary—that the senior’s adult children or another trusted person has an understanding of their financial situation—what is sometimes referred to as “financial caregiving.”
It happens too often that an older person suffers a sudden serious health event, and no one knows how or is able to access the person’s money in order to do things like pay household bills, taxes, or medical expenses. Where is mom’s checkbook? Where’s the safe deposit key? What company is the custodian for her IRA? Oh wait, my name isn’t on any of mom’s accounts, so I can’t even access the funds. It’s a difficult situation to navigate, especially on top of the stress of dealing with your loved one’s health crisis.
Another all-too-common scenario: A senior, perhaps in the early stages of dementia or even with normal age-related cognitive decline, begins forgetting to pay their bills. Or it could be that they can’t recall where they put their checkbook and the stamps. Or worse, maybe they have been taken advantage of by a scam artist of some type. Such situations can result in utilities being turned off or a foreclosure on their home, ruin a senior’s credit rating, and even drain the savings they have worked so hard to build up over their lifetime.
>> Related: When is it Time to Take the Keys from an Aging Love One?
Why people don’t want to talk about it
These example situations are just a few of the reasons why it’s important for adult children to initiate a conversation with their aging parent(s) about their finances and then take steps to put a plan in place to handle such scenarios where financial caregiving may be necessary. And if your parents are of an advanced age, there really is no time like the present to broach this topic.
But oftentimes, both parties—parent and adult child—put off this crucial discussion. As with most topics that deal with the realities of getting older and even dying, it is human nature to want to avoid these taboo subjects.
Aging parents may be in denial about their level of cognitive and/or physical decline, adamant that they are still perfectly capable of remaining independent, both with their living arrangements and their finances. Adult children may struggle with seeing their parents deteriorate with age and thus want to avoid the misperception that they are “meddling” in their parents’ business.
But the important point for all parties to keep in mind is that this is really just one of the steps that everyone should take in order to prepare for the unknowns of the future. Just as you create a will, save money for retirement, or purchase insurance coverage, taking steps to plan for handling a senior’s finances if they are no longer able to do it themselves should be on the list of things to do before a crisis arises.
>> Related: Pre-Crisis vs. Post-Crisis Planning: Confronting Life’s Unknowns
What do I say to my loved one?
In order to initiate the conversation with your aging parent(s) about putting a plan in place to manage household finances if needed, it is often best simply to find your moment, and dive into the subject. A gentle way to start might go something like this:
“Dad, you know how as most people get older, they may need a little extra help with things like yardwork or chores around the house? Well, I wanted to talk with you about how I might be able to help lift some of the burden off of you when it comes to managing your household finances, just in case it should ever become a challenge for you to do it on your own. I know you and mom worked hard to financially prepare for your retirement and future care needs, and I want to be sure that we have a plan in place so that, if the time comes, we are able to easily access those funds to help take the very best care of you and mom.”
Of course, you’ll want to tailor this script to your unique situation, but this gives you a general idea of how you might begin your conversation on financial caregiving.
>> Related: Sibling Rivalry: When Family Members Disagree on Senior Care Options
Steps to take to prepare to assist with financial caregiving
Once you (hopefully) get your aging parents’ buy-in to the idea of preparing for you or another trusted loved one to assist with their financial life, here are a few of the specific tasks you will want to consider completing:
- Create power of attorney documents, designating someone who will have the ability to make important decisions—including financial decisions—for the senior should they become incapacitated.
- Get yourself or another trusted loved one added as an authorized signatory on the banking accounts and the safe deposit box.
- Contact the individual retirement account (IRA) custodian company to determine if they have their own specific power of attorney documents that must be completed in order for a loved one to access the IRA’s funds.
- If you live far from your parents but still want to prepare for the “what ifs” of their future, you can explore hiring a professional daily money manager—a person who will sit down with your loved one and help them pay bills, file insurance paperwork, balance their checkbook, and much more. Visit American Association of Daily Money Managers to find an insured, bonded money manager in whom you feel confident.
Taking these steps now, before an issue arises, can save you and your loved ones a lot of heartache and headaches down the road should something happen that prevents the senior from being able to attend to their own finances.
>> Related: Power of Attorney Documents Can Alleviate Problems Later
Helpful resources on financial caregiving
If you’re still feeling unsure or overwhelmed by the prospect of assisting your aging parent with the management of their household finances, there are a number of places you can turn for help.
- Visit org and search their site for the phrase “financial caregiving.” For example, they have an informative whitepaper entitled, “Family Financial Caregiving: Rewards, Stresses, and Responsibilities.”
- The Consumer Financial Protection Bureau has several guides on managing someone else’s money, which can help financial caregivers navigate the process and their responsibilities.
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