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8 Steps Towards Managing Your Parents’ Finances

Taking the appropriate steps towards monitoring or managing your parents' finances today can make all the difference tomorrow.
manage your parents' finances

It’s normal for aging parents to want assistance with their personal finances, even if they don’t realize it at first. Cognitive decline often begins in our 60s and can be gradual—so gradual, in fact, that it may not be clear that their finances are in disarray until issues develop.

It’s a good idea to start planning today to help your parents avoid future financial problems, which is exactly why WayWiser was founded.

Signs That You Should Manage or Monitor Your Parents’ Finances 

While not every scenario is black and white, several indicators may dictate that it’s time for you to become more involved in your parents’ finances. If you notice any of these indicators, it may be time to start a conversation and ask questions.

  • They are forgetting about money.
  • Your parent has been making outlandish purchases.
  • They are expressing their dissatisfaction with money in greater numbers than in the past.
  • Perhaps you’ve observed that they’re having memory problems.
  • They have a backlog of unopened mail.
  • They are having movement problems or physical difficulties.

1. Talk to Your Parents

talk to your parents about managing finances

The first (and possibly most crucial) step in assisting your parents with their finances is to communicate with them. The initial conversation may be difficult for both you and your parents, but it is necessary if you believe they require assistance. You shouldn’t go in expecting to entirely control their financial decisions, either. They may still be able to manage the majority of their responsibilities and simply require your assistance in sorting through the specifics.

Once you’ve sat down with them and communicated your desire to manage their funds, use this time to go over the following with them:

  • Accessible funds – Bank and investment statements will show you available funds as well as the amount of money your parents have taken out of their accounts.
  • Legal position – Now is a good time to check to see whether your parents have made any legal arrangements that could affect how their money is spent, such as a living trust, will, or Power of Attorney.
  • Goals – Find out what your parents wish to do with their money. The more you know about their objectives, the better you will be able to assist them in planning their finances so that their money is secured while they achieve their objectives:

              – Do they wish to travel more or spend more money on hobbies?

             – Are they fed up with the time and effort it takes to transfer money across accounts?

             -Are they anxious about future expenses such as house repairs or medical bills?

  • Monthly income and expenses – You can get this information from your parents or by reviewing their tax returns, receipts, and incoming bills.
  • Questions – Many older people are embarrassed to ask questions regarding financial topics such as long-term care insurance and reverse mortgages. Volunteer to obtain them the information they require.

Throughout the process, it’s critical to remember to respect your parents’ decisions. Express your concerns, but also listen to what they have to say. Even if your parents are suffering from dementia or Alzheimer’s, they can still have a say in their finances. 

In this instance, you may need to take on more responsibility, yet shutting them out of the process totally may be detrimental to their emotional wellbeing. If you have siblings, it is a good idea to solicit their opinions as well.

2. Examine Their Economic Situation

examine the economics when managing your parents' finances

After you’ve determined your parents’ financial needs and aspirations, you must determine if they have adequate money to achieve those demands. Work with them to analyze their financial accounts, sources of income, and any other situations that may have an impact on their cash flow. For example:

  • Taxes – Do your parents owe any taxes, such as back taxes or mortgage interest? Look into special programs for seniors who have tax issues, such as property tax deferment.
  • Investing – Where has their money been invested? Is it in cautious fixed income investments like bonds and certificates of deposit, or are major amounts of their investments in higher-risk stocks? This could be an excellent opportunity to have a financial advisor analyze their portfolio and make advice on modifications to their estate planning.
  • Income sources – Do they have a fixed income, such as Social Security with an annuity as a supplement , an Individual Retirement Account (IRA), or a 401K retirement plan?

3. Collect and Organize Important Documents

organize important documents

Another helpful step is to find and arrange all of their relevant paperwork in one location. This will be extremely beneficial to you in the future. Whether or not you currently manage your parents’ finances, you should finish this stage.

Among the major documents that could be included are:

  • Policies of insurance
  • Pension information
  • Account statements
  • Mortgage knowledge
  • Any living trusts or wills
  • Titles
  • Returns on taxes
  • Information on safe deposit boxes (if applicable)
  • Payments from social security

This might be a challenging moment for your parents. They may be concerned about your selections, or they may be concerned that you will take everything away from them. Remember to reassure them that you are merely here to assist them and will not do more than they require.

4. Consider Executing a Power of Attorney

execute a power of attorney to help manage your parents finances

This is a legal document that gives someone the authority to decide on important matters on behalf of someone else. If the situation necessitates more direct engagement, it may be prudent to get power of attorney for your parents. This will let you to legally manage the majority of your parents’ finances.

A bank will require verification that you are entitled to the information before allowing you to do anything with their money. Even if your name is not on their checking account, you can still remit their payments if necessary with power of attorney.

You should also ensure that your parents’ wills and trusts are up to date. A will specifies who will administer their estate and who will inherit what. A living will describes your parents’ health-care decisions in the event that they are unable to make them themselves. A trust governs the distribution of money such as IRAs and 401Ks.

If any of this is confusing, there are elder law professionals who can assist or you can find help on how to fill out the proper forms online.

5. Think About Hiring Professional Assistance

hire professional assistance

Managing your own money may be difficult, and adding the additional duty of managing your parents’ money can be overwhelming for some. If everything is becoming too much for you, hiring a professional can make things much easier. A financial planner or professional accountant can sort through everything and either advise you on what needs to be done or handle the most of it for you. Of course, these specialists do charge for their services, so keep that in mind while deciding which path to take.

6. Gain Account Access

account access

Obtaining access to your parents’ financial accounts can be advantageous, but it may require some effort, even if you have power of attorney. Some banks may require you to fill out their own documents, but after you do, you’ll be able to write checks and deposit money for your parents. When requesting access, you have a few options to consider. You can just be granted permission to perform transactions, or you can become a joint owner of the account.

The bank may be able to assist you in determining which choice is best for your situation, but it may be a good idea to consult with a financial professional as well.

Apps like WayWiser can also allow you to monitor your parents’ accounts without necessarily having administrator access. This would at least give you insight into any alerts regarding fraud or exploitation.

7. Make Use of Technology

waywiser is great for managing your parents finances

When it comes to finances, technology might be your best friend. Set up an account for your parents if their bank supports internet banking. This might help you keep track of things like credit card statements and account totals. Setting up SMS alerts or emails for suspected fraud is also a good idea. If something strange occurs, you will be able to detect it fairly quickly.

It’s also a good idea to scan essential documents and save them on your computer or a flash drive for safekeeping. If you’re okay with that, putting those papers to a cloud service will allow you to access them on your phone or computer anytime you need them. If you’re concerned about privacy, try looking for reputable cloud services that have additional encryption.

All of this is included in WayWiser’s platform.

8. Keep Family Updated

make sure to speak to your family

Making your family aware of what you are doing is a vital component of managing your parents’ finances. Of course, your parents are the first people you should keep informed, but you can also share information with your siblings or possibly your parents’ siblings. 

Transparency is essential while managing the finances of a loved one, as others in your family may be curious about what you are doing. There may be more scrutiny, and informing your siblings about what is going on may be able to prevent further disagreements from occurring.

Documenting everything you do for your parents can be useful if you get into difficulties, either with your siblings or legally.

Conclusion

It is critical to protect your aging parents’ money for their financial well-being. Remember to safeguard their freedom and dignity as you work with them. Consult with your parents to choose the best course of action, and keep the rest of your family informed throughout.

Inquire as to what they desire. Make an effort to obtain their support for changes: Communication is essential. As you take activities on their behalf to secure their money, help them realize the importance of financial security.

Taking these steps to manage your parents’ finances, ensuring that their funds are carefully managed and cared to, may alleviate a lot of concern for you and your family. It may be a difficult road at first, but once you’ve sorted things out, you’ll feel a lot better about your parents’ financial affairs.

WayWiser provides all of the tools needed to help monitor or manage your parents’ finances. You can communicate with your family, monitor banking information, upload and store important documents, and more.

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