Taking Over Aging Parents' Finances

Taking over financially for elderly parents can be a significant responsibility. I have shared my experience with realizing my mom was struggling and gradually finding myself taking over her life. Emphasis on gradual. She was okay with me doing her taxes and taking over bill payments electronically, but these things didn't happen overnight. It became clear to me that by the age of 79, my mom was tired and losing the details of money management. She missed paying a few things when I had to go behind her and ensure they were paid. Most seniors aren't going to ask for your help, but they may respond positively when you offer help. I offered to help in many areas, but her finances were big. She liked keeping that part of her life private, so it was probably a clue that something was wrong when she let me help her. But that's hindsight. At that moment, neither of us thought it was a big deal. But it was. Here are five essential steps to consider:

1. Assess the Current Financial Situation: Review your parents' financial documents, including bank statements, investment accounts, bills, and any outstanding debts. Understand their income sources, expenses, and any existing financial arrangements or obligations. Also, look for retirement paperwork and benefits. Medicare will play a part in this scenario as well as any other supplementary insurance. Know where to find all of this.
2. Create a Budget and Financial Plan: Develop a detailed budget that outlines their monthly income and expenses. Identify any areas where adjustments may be needed to ensure financial stability. Consider healthcare costs, living expenses, and potential long-term care needs. This part may require more of their input depending on what stage of caregiving you're in. It takes time for them to trust that you are capable but also with dementia comes paranoia. I remember being awakened in the middle of the night to check her bank account and that was long before an Alzheimer's diagnosis.
3. Legal and Estate Planning: Ensure your parents have up-to-date legal documents, including wills, power of attorney, and healthcare directives. If these documents aren't in place, you should consult an attorney to set them up. Having a clear plan in case of incapacity or death can help manage financial matters more effectively. I bought some software to create wills and power of attorney paperwork because my mom doesn't have a complicated tax situation. If you can't afford $500, there's software that can walk you through the process. If there's tons of assets, definitely consult an attorney.
4. Consolidate and Simplify Finances: Streamline their financial accounts by consolidating where possible. This might involve closing unnecessary bank accounts or combining investment accounts. Simplifying their financial landscape can make it easier for you to manage and monitor. In my mom's case, she had taken out a second, second mortgage (thanks, Countrywide) so I refinanced her mortgage for her. She had been paying for years and the balance was not decreasing due to shady lending.
5. Explore Assistance Programs and Benefits: Investigate government assistance programs and benefits your parents may be eligible for, such as Social Security, Medicare, or Medicaid. Pro-Tip: Medicaid is state run so make sure you know how your state handles it and what the application process entails.

Remember to communicate openly with your parents throughout this process, respecting their autonomy and involving them in decision-making as much as possible. If the financial situation is complex or you feel overwhelmed, consider seeking advice from financial advisors or eldercare specialists who can provide guidance tailored to your circumstances. They usually charge a fee of $300-$500 to get a consultation but it's highly recommended for complex tax scenarios or if your loved ones need to be put on Medicaid sooner than later. Whatever your scenario, plan ahead. You don't want to be figuring this stuff out when your loved ones are in urgent need of healthcare.