Could you access your aging parent’s finances if you had to take over? Maybe this sounds familiar.
Your mother has always prided herself on paying her own bills and balancing her checkbook each month. But one day you notice that a bill or two is overlooked and reminders are piling up. You’ve tried to assist her with her finances but she resists you. To her, it’s one step closer to losing her independence.
Then a catastrophic health problem happens and she’s no longer able to manage her money. You have to step in. Only problem is, you don’t have access to her bank, credit card or online account information. You are essentially locked out and powerless. In the meantime, the bills keep coming.
Having the financial access conversation with your parent is just as important as having the end of life discussion. We recently talked with Curtis Farrell, CFP®, AIF®, an investment financial advisor with Financial Management Network. We looked to him for professional advice on how adult children can prepare for the task of handling their aging parent’s finances if the time ever comes.
“It’s a rarity that people in their 80s and 90s are able to keep all of their financial information straight,” Farrell said. “Hopefully, they have competent family members or some sort of support system to help them.”
Based on real-life situations he and his firm have experienced with elderly clients, Farrell offered tips in case you ever need to take over your aging parent’s finances.
Step #1: Provide Monthly Bookkeeping Support
According to Farrell, the first step is to make sure the senior will allow you to help. Sounds easy, but it can be tricky. Some older people consider it an invasion of privacy. Offering to help can also imply they’re no longer capable of handling this task on their own.
- Once permission is granted, review their bank statements and bills on a monthly basis. Help them pay their bills by writing the checks for their signature. Then mail the checks.
- Automate bill paying as much as possible.
- Monitor their credit card statements for fraud and other scams. Unfortunately, seniors are all too ready to hand over credit card information or gift cards.
Step #2: Establish Legal Access to Financial Accounts
The above steps are very important but things intensify if your loved one has an accident or falls ill unexpectedly. If your aging parent is hospitalized, they may not be able to grant you access to their accounts.
The next level of support allows you to gain access to their bank and credit card accounts while they are still cognitive. You must have access to your parent’s finances so you can pay bills, transfer funds, review online statements and manage other tasks.
- Take your parent to their bank(s) and add yourself to the signature card for their account. Most banks require the account holder be on site before they’ll approve the addition to a signature card.
- Establish direct deposit of Social Security, pension and other sources of income.
- If possible, set up credit card accounts together so you can both access the account online. Most seniors have trouble understanding online access to financial statements so you may need to handle this for them from the start. If you didn’t set up joint access to their online accounts, be familiar with them. Make sure you have the login credentials (user name and password) for each account.
- Set up spending thresholds for credit card accounts.
- Review mailed credit card statements on a monthly basis.
- Set up fraud alerts using text and/or email notifications. You want to be notified even if the account is in your parent’s name.
Step #3: Establish Power of Attorney For Your Aging Parent’s Financial Accounts
Many adult children have legal power of attorney for their loved one. But when it comes to accessing bank accounts, credit cards, insurance, investment accounts and even Social Security, a standard legal power of attorney letter may or may not suffice.
Each entity may have its own requirements for access. In most cases, they’ll want your parent to come to their office to sign their own specific document while your parent is still cognitive.
- Contact each entity where your parent has a financial relationship. Let them know you are helping with your elderly parent’s finances. Ask them what additional documentation they need for you to access your parent’s account. Then take care of it.
- When visiting a bank, take the power of attorney letter your parent signed with them each time you visit even though they have a record on file. The financial institution will have to check your authority to access the account. Taking the document with you each time will save time and reduce frustration.
- Review your state’s requirements regarding access to your parent’s finances. Different states have different laws governing access. It’s best to research their requirements well ahead of time.
Final Thoughts On Legally Accessing Your Aging Parent’s Finances
If there’s one thing Curtis Farrell and his associates have learned over years of working with elderly clients and their families, the more advance planning you do, the better off you are.
“Nothing is worse than knowing the money is in your parent’s bank account, but you can’t access it to pay bills, transfer funds or even close the account,” Farrell says. “The bills are piling up and since you don’t have power of attorney you can’t use the money. Sometimes that means you have to hire legal counsel which can lead to going to court.
“We’ve also seen adult children without the proper authority writing checks and using their parent’s credit cards – a bad business which isn’t correct or ethical.
“The best scenario for all parties concerned is for seniors and their children to work together well ahead of any catastrophic situation. Everyone should agree on the details so the finances are handled with minimum frustration and as the senior intended.”
Know someone who could benefit from Farrell’s tips? Use this link to forward the article.
Curtis Farrell, CFP®, AIF®, is affiliated with Financial Management Network, an independent fee-based financial planning firm. Financial Management Network is also a member firm of Retirement Plan Advisor Group, an independent practice management group of more than 400 advisors with more than $100 billion in plan assets.
The above information is intended as a general guideline. We strongly advise the reader to contact their attorney for additional information or clarification of the above.