Signs That Your Elderly Loved Ones May Need Assistance Managing Their Finances

The question of, when is it time to assist your aging parents with their personal finances is difficult to answer, and more often difficult to accept personally that the parent/child roles are reversing and it is time for you to step in and help manage the finances of your parents.  As difficult as it is for an adult child to come to the realization that their parent will not live forever and may not be as capable as they were when they were younger, it is usually more challenging for the parent to relinquish control over their finances. In this transitional period there may not be one outward sign that the parent needs assistance, but many subtle signs that the task of managing personal finances is becoming overwhelming and possibly neglected. Clues that may suggest that the time to offer assistance has arrived are:

Even though your parents are not asking you to help manage their finances, these signs may be telling you that it is time. This transition can begin with a step as basic as designating a specific receptacle to place the incoming mail until it is sorted with a family member’s assistance.

If the bank is returning checks stamped insufficient funds, confirm that the monthly inflow of cash is adequate to cover the expenses. Consider assisting with paying the bills and balancing bank statements monthly. Utilize electronic bill paying services and automatic payment options for recurring debts.

If your parent does not have a current statement of net worth, identifying and summarizing the current assets and debts as you review the monthly statements will provide the clarity that will be necessary to make accurate financial decisions in the future regarding your parent’s well-being and the estate. As you are reviewing the statements monthly, list the identified assets and debts under the appropriate categories and summarize the totals.

Initially you may want to help pay the bills by writing the checks then giving your parent the opportunity to sign the checks.  By signing the checks they will still feel in control of their finances. After the mail is sorted and the bills are paid, file all forms together with information to be reported on the following year’s tax returns, such as car registration fees, property tax bills and rental property receipts.

To confirm that your parent’s consumer debt is being managed properly and not abused, order a free copy of their credit report at:

Review the home, auto and umbrella insurance policies with your parent to confirm that the coverage is adequate and in place.  If changes need to be made on the policies or if the insurance company needs to be notified that the drivers’ license has expired, consider assisting your parent with the task of contacting their agent by placing a joint call with them.

Does your parent have a safe deposit box or a storage unit?  Do you know the location of these receptacles, where the keys are and who has access to the units?

Review the investment portfolio; is the portfolio risk appropriate for their age?  Can various accounts with like titling be consolidated into one account?  Consolidating various accounts provides the transparency that is necessary to determine the portfolio allocation as well as reduces the number of statements to manage. Request that duplicate statements are also sent to your home to review monthly.

Confirm that the required minimum distribution (RMD) is being withdrawn from the appropriate retirement accounts and reported on the tax returns.  The IRS penalty is significant when a required minimum distribution is missed.  To avoid the chance of missing this mandatory withdrawal and facing penalties, ask your investment advisor to withdrawal the RMD as an automatic distribution.

Review and confirm that the estate planning documents are signed and current.  Your parent may or may not have a trust or several trusts, but should have some basic planning in place such as a will and power of attorneys for both finance and health care. After reviewing the current estate planning documents, store them is an easily accessible secure location. If you are not the trustee, executor or agent, notify the appropriate person of this location.  Contact an estate planning attorney for guidance if these documents are lost, need to be updated, or do not exist.

Review all bank, brokerage statements¸ and real estate deeds to confirm that the assets are titled appropriately.  It is much easier to retitle the assets while your parent is alive than to face the consequences of an incorrectly titled asset after his or her death.

Are the beneficiaries correct on the life insurance policies, annuities and retirement accounts?  It is not uncommon that a beneficiary is listed while no longer is the intended recipient on the contract.  Once a death occurs it is too late to make any changes and unfortunately if the beneficiary is not the intended recipient the trust or will does not override this mistake.

Gather the contact information of your parent’s doctor, accountant, attorney, bank, brokerage firm and financial advisor.  At some point in the future you will need this information and appreciate that it is available.

Helping your parent organize and manage their personal finances with dignity and respect will provide them the opportunity to transition through the various stages of aging gracefully, while offering you the peace of mind that their intentions are honored and implemented.

Important Disclosure: This content is for informational purposes only. Opinions expressed herein are subject to change without notice. Beacon Pointe has exercised all reasonable professional care in preparing this information. Some information may have been obtained from third-party sources we believe to be reliable; however, Beacon Pointe has not independently verified, or attested to, the accuracy or authenticity of the information. Nothing contained herein should be construed or relied upon as investment, legal or tax advice. Only private legal counsel may recommend the application of this general information to any particular situation or prepare an instrument chosen to implement the design discussed herein. An investor should consult with their financial professional before making any investment decisions.

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