Helping elderly family members manage finances
Monday, 23 November 2015
Helping aging family members with finances while still allowing them to have independence is a fine line many of us may have to walk some day.
We want to protect our relatives from being exploited, but they still want some control. Even though it's a delicate balance, it can still be done. Here are some strategies to help.
Help with their accounts
It may be wise to have your name on your elderly family member's financial accounts, but having them on utility accounts could make sense as well. If a cable salesperson happens to convince your elderly relative to add premium channels that costs hundreds of dollars each month, you would be able to cancel the order. But if your name isn't on the account, you may not be able to cancel at all.
And if it's time to move your elderly relative to an assisted living facility, you may want to have your name—or power of attorney—on any of their accounts in order to cancel, claim deposits, or authorize any other changes. Putting your name on the account can still make you responsible for the bill if your family member cannot pay. But if adding your name poses no financial risk, it may save you a lot of frustration. It's easier to do this when the service is first established, but you could be able to add your name later. This may apply to financial accounts, too.
Being a co-owner on an account can give you equal access to all assets. You can also think about being an authorized signer, which allows you to sign checks, as well as withdraw and deposit funds. It's possible to be a co-owner or authorized signer on checking, credit, and savings accounts.
The main objective is to give yourself some ability to help take care of the day-to-day finances in case your elderly family member cannot, or if they start making poor decisions about their accounts.
Power of attorney can also give you this ability, but simply having your name on the account may give you automatic access without having to provide documentation to the company. You may also want to explore be named as a representative payee on your elderly relative's Social Security account for management purposes as well.
Monitor accounts, pay bills online
Your aging family member may not be familiar online financial tools, as seniors are typically slow to adopt this technology. But if you're a joint owner or authorized signer on the account, you could monitor accounts online. You can keep an eye on balances, see transactions, and set up alerts. This is something that can be done with many financial and utility accounts.
Also, if your elderly family member will allow it, think about having their bills paid electronically. It might be tough to convince them to give up writing the check for the power bill they've been writing every month for years, but it may be worth a try. Autopay can guarantee bills will be paid each month, and paid on time. Writing and mailing checks does not.
Reduce risk of fraud and mistakes
Anyone can fall victim to a financial scam or have their checkbook stolen, and the FBI says seniors tend to be more vulnerable than most. But there are plenty of ways to reduce the risk of fraud and financial mistakes. Let's start with the mail. While many seniors use email, they still rely heavily on the U.S. Postal Service. You may want to stay on top of their mail—particularly special offers, promotions, and solicitations from charities.
There have been kind-hearted seniors who've written a $10 check to one charity and find themselves inundated by requests from others. You can try to protect them by getting them off as many mailing lists as possible and screening their mail. DMAchoice is one place where you can find out what kinds of mail you can stop.
Being organized also helps. A simple organizational system can keep documents from being misplaced or discarded by setting up files or boxes where they can keep financial documents, medical and insurance paperwork, and other important information. Try checking the files weekly for anything requiring immediate attention. You may also want to keep copies of some of the more important documents—like wills, deeds, financial statements, and tax returns—in another location, just to be safe.
Unfortunately, there are people who take advantage of seniors. Think about screening who comes into their home, fixes their car, or even cuts their hair. It can be easy for someone to steal a checkbook, sell them an unnecessary engine overhaul, or ask to borrow money.
Being aware of the people in their lives that they interact and do business with can reduce the risk of being exploited or defrauded.
Power of attorney
You may need to be able to act on behalf of your elderly relative, and one way you can do this is by getting power of attorney. Regular power of attorney can allow you to act for them in their absence, while durable power of attorney can allow you to do so if they are incapacitated, and even after they've passed on. In the case of an elderly relative, it could make sense to get durable power of attorney.
You may also want to think about getting medical power of attorney, which can allow you to make health care decisions on their behalf. Think about encouraging them to also have a living will that clearly states their wishes in regards to medical treatment. You can actually download most of these documents from the Internet, and have them signed by your elderly relative and witnessed.
But in order to make sure they withstand any legal challenges, strongly consider having them reviewed by an attorney.
If you don't have the time to micromanage your relative's finances and you're able to afford it, enlist the help of professionals. Consider hiring a trusted accountant to file taxes, and have financial consultants manage investment accounts. Check local resources for programs that help seniors manage their money. Many nonprofit organizations offer Daily Money Management Programs (DMMs), but they are not necessarily free. Also, carefully investigate the provider of these services to make sure you are hiring a reputable, well-known organization.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultants about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA USA does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards.
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