Taking Over Your Parents’ Finances

“The longer I live, the more beautiful life becomes.”

– Frank Lloyd Wright

Aging can be a sore subject for families. No one likes to think about the prospect of losing their autonomy. As such, parents may not do much financial planning for the elder years, when they may need help with financial considerations.

Often, it’s a sudden event like a trip to the emergency room that forces adult children to take the wheel. Abruptly taking over finances for a parent can be very disruptive. Here are some steps you can take to be proactive and avoid future problems.

Talking it over

Did you have the “Birds and the Bees” talk when you were growing up? Well, the financial topic can be kind of like that. Your parents may be willing to talk but reluctant to get into the details. You may be hesitant to push them for fear of overstepping your bounds. Even so, it’s very important to discuss your parent’s finances and caregiving preferences as a family.

It pays to be organized and to know what information you’ll need, so you can ask the right questions. If your parents put you off, consider a non-threatening approach, such as asking about one aspect at a time and gradually increasing your assistance as needed. The key is to be prepared to handle the financial tasks before Mom or Dad can no longer take care of their finances.

Here is a checklist to start with:

1.  Do you have contact information for their doctors and advisors?

Make a contact list of your aging parents’ doctors. Note details of medications your parents are taking and where the prescriptions are filled. Also gather contact information for their financial advisor, tax advisor, attorney, and insurance providers.

2.  Do they have durable powers of attorney for finances and healthcare?

A Durable Power of Attorney (POA) (for finances) and an Advance Healthcare Directive (for medical care) are critical documents for elderly people. They give the named agent the legal power to act for them should it be needed.

3.  Do you know where important financial records are kept?

Whether in paper form or in electronic form, you need to be able to access important records when you need them. This includes their taxes, investments, estate planning, and insurance.

4.  What are the income sources?

Do your parents receive pensions, annuity income, or Social Security? You need to know what their income sources are so you can make sure the cash flow keeps coming in for your elderly parents.

5.  What are the monthly expenses?

It’s important to know how when bills such as insurance, utilities, taxes, and debt payments are due and how they are paid. It is equally important that you can pay them if your parents can’t. Ask your parents to give you signature power on their checking account or electronic access to the account.

6. Do they have long-term care insurance?

The cost of at-home care or care/residence in a facility can be very high, and they are mostly not covered by Medicare or health insurance. Long-term care insurance benefits can be very important in the financial picture. You should know what the policy will pay and what the requirements are to receive benefits. And most importantly, make sure the premiums are paid when due.

Making a plan

Taking over your parent’s finances can be a fair amount of work, especially if you have your own household finances to manage. It pays to have a plan and a routine or regimen so nothing is lost or forgotten.

Start with a summary of the income and expense items discussed above. Include income receipt dates and expense payment due dates. From there, you can build checklists for the various tasks and add reminders to your calendar. 

It’s also important to check and make sure payments have been processed, income items received, and tax returns have been filed. Doing this also helps you make sure no fraud occurs.  

Getting the advice you need

Handling elderly parent’s finances is often a team effort, especially if your parents have a higher net worth. The financial advisor, tax and accounting professional, and legal advisor should coordinate on important issues and should be in regular communication with your parents. Ask to be introduced to them and to sit in on meetings with them. Ideally, you want your parents to authorize their advisors to speak with you, and if needed, to take direction from you. 

At Blankinship & Foster, we are not only personal financial advisors, we are family wealth advisors. Aging is one of the many life transitions we help our clients work through as a family. As fiduciary financial advisors in San Diego, our job is to make sure our clients navigate life events with clarity, confidence, and direction. Contact us today to discuss how we can help you. 

About Jon Beyrer

Jon Beyrer, EA, CFP® is a partner of Blankinship & Foster LLC and is the firm’s Chief Compliance Officer. As a lead advisor, he focuses on helping families achieve their goals with sound wealth planning. In the community, Jon serves on several boards and is co-founder of the Professional Alliance for Children, a legal/financial charity for families of ill children. He has been quoted in The Wall Street Journal, The New York Times, and the Journal of Financial Planning. Jon lives in San Diego with his family.

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