Taking Care of Your Elderly Parents’ Finances
This post originally appeared at Dummies.com.
Caring for an elderly parent can be physically, emotionally, and mentally challenging. Becoming a caregiver to a parent is a role reversal, even if you’re just attending to his or her health. If you have to take over a parent’s finances, too, it can be overwhelming.
These five steps can make it easier for you to help your parents manage their money.
1. Open the lines of communication.
The most important, and often overlooked, aspect of helping a parent with money is being able to communicate with them. Unless their mental capacities have lapsed, discuss everything related to their finances with your parents before you make any decisions or changes.
It’s their money, after all, so include them in decisions regarding what to do wit hit. Make sure they understand that you you want to help them rather than take away their independence, and then keep them informed by telling them what you are doing with the monies as you are doing it.
Also communicate with other family members. Even if one sibling is the primary healthcare provider while another is handling the finances, all siblings need to stay in the loop — especially those who are not local or involved in the day-to-day management of your parents’ lives.
Sit down with all interested parties to determine the following:
- What level of care needs to be provided, and how much your parents can afford.
- Who will provide the care, and where. If you bring in an outside caregiver, select one family member to be the point person for the caregiver.
- Where the money for the care will come from, and who will control it. Again, you need one person to pay your parents’ day-to-day bills and manage their assets.
2. Establish a durable power of attorney.
A durable power of attorney allows you or another trusted person to act on your parent’s behalf. This simple legal document allows this “advocate” to make financial decisions for your parents if they become unable to do so, on their own.
Those suffering from dementia or senility, who are no longer competent to make their own decisions, still have finances to manage. Having power of attorney over your parents allows you to write their checks, pay their bills, change their investments, and attend to other financial matters. This legal document needs to be created before a parent becomes incapacitated.
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