Checklist for Taking Over Parents' Finances and for Planning Care
Has your parent or elderly loved one in Bellefontaine, OH, signaled that they need financial help? Do they find themselves forgetting to pay bills or failing to write important checks?
If so, it may be time to step in. As seniors age, they may have trouble keeping track of their money. Problems such as cognitive decline and dementia can only exacerbate the issue.
Are you looking for practical financial caregiving tips before you assist your parent? Read on for a checklist for taking over parents' finances.
Transition Slowly
After a lifetime of managing their own money, it can be difficult for seniors to give up financial independence. Even if your parent seeks assistance, respect their difficulty in giving up independence.
Take the financial transition at the speed they prefer. For instance, you can start by having a conversation about what they need help with and responsibilities they may still be able to manage on their own.
Reassure them that you'll take every precaution and legal safeguard to protect their assets. Go over the information as many times as they wish.
In some situations, a gradual transition may not be possible. For instance, if your loved one suffers from dementia, they may need you to take over immediately. In that case, try to empower them as much as possible and ensure they still feel independent.
Organize Records and Bank Statements
Your parent may have quite a few documents that need organization. By the time they reach out for assistance, it may have been some time since they could adequately manage their finances.
As a general rule, you should keep hard copies of bank statements for up to one year, according to Investopedia. However, you may need to keep them for longer for trust or accounting purposes.
Some important records to have on hand include:
- Bank statements
- Brokerage statements
- Wills and estate plans
- Power of attorney contracts
- Receipts for large purposes
- Recurring expenses, such as assisted living
Store documents in a secure location, whether physical or digital. Retain both hard copies and digital files.
Hard copies: Keep these in a physically secure location, such as a locked file cabinet or a fireproof safe.
Digital files: Upload these to a secure, cloud-based file-sharing platform. Enable security measures such as two-factor authentication for an added layer of protection.
A thumb drive or external USB flash drive is a good hybrid option. You'll have access to the digital files in a portable manner.
Discuss Eldercare Cost Planning
Senior care or assisted living expenses can make up a substantial portion of your loved one's finances. However, they're one of the best caregiving tools for families who do not have the expertise to tend to elderly parents.
It's important to calculate the budget for care based on your loved one's monthly or annual income. Here are some common sources of income to consider:
- Required distributions from retirement accounts, such as 401(k)s, traditional or Roth IRAs, or 403(b)s
- Fixed pension income
- Dividends and bond yields from brokerage accounts
- Social Security income
While your parent has their full mental faculties, tour care communities to see if you can find a good fit. Ask them for their opinion after every visit and consider their preferences.
If you identify an assisted living community that suits your loved one's needs, inquire about their monthly costs and available packages. There may be different tiers, depending on the level of care needed.
You should also factor in cost increases related to greater care needs and inflation.
Consolidate Accounts
Your parent may have many different accounts at various financial institutions. Managing all these accounts can be frustrating and confusing.
Consolidate as many accounts as possible into a single institution. For instance, move all cash accounts to a bank like Wells Fargo.
Apply the same principle to brokerage accounts. If possible, consolidate retirement plans and general brokerage accounts with a single firm.
The biggest benefit of consolidation is that you can often receive consolidated statements. You'll get a single file that lists all of your assets. No more hunting down bank statements or logging into several different accounts.
Automate Regular Expenses
Establish automatic payments for as many expenses as possible. These can often apply to recurring costs like:
- Utility bills, such as water, gas, and electricity
- Cell phone or landline service fees
- Financial advisory fees
- Healthcare premiums
- Prescription medications
- Caregiving costs, such as assisted living
Ensure all payments are made with the same debit card or withdrawn from one bank account for easier tracking.
Take Care of Legal Issues
Even if your parent trusts you completely, you still have to ensure you're covered on the legal front. You need explicit documentation and consent for every aspect of financial caregiving.
The best way to avoid legal issues is to establish a designated power of attorney (POA). Make sure your loved one is of sound mind when they sign the paperwork.
Consult with a lawyer to draft the necessary documents, and a notary may be required during the signing process.
Go over your loved one's medical directives and estate plans. Revisit them periodically in case they have changes. You may need to make adjustments based on unexpected costs or their available assets.
Despite good intentions, a POA can create opportunities for misuse. Emphasize transparency with other parties, such as siblings and beneficiaries. Volunteer access to information and regularly ask for their input on financial matters.
Use This Checklist for Taking Over Parents' Finances
Managing senior budgets may seem like a daunting task, but it doesn't have to be. With this checklist for taking over parents' finances, you can navigate the transition with ease.
At Campbell Place Assisted Living, we put senior health and well-being first. With our assisted living program, chef-prepared meals, and personalized assistance, you can rest easy knowing your loved one is in good hands.
Are you interested in learning about all our community has to offer? Contact us today with your questions, or visit our beautiful campus in Bellefontaine, OH, to see for yourself. We can't wait to hear from you!