When and How Should You Take Control of Your Parents’ Finances?
Growing up, your parents may have handled many of your financial matters when you were a minor. But while we may not want the time to come, it is inevitable that we all age – including parents. When that time comes, it is important to be prepared to take over your parents’ finances when they become no longer able to do so themselves.
Why Should You Think About Taking Control of Your Parents’ Finances?
What exactly is the benefit of taking control of your parents’ finances? There are numerous benefits, actually. As people age, the likelihood of developing conditions such as Alzheimer’s disease and other forms of dementia increase. These conditions negatively impact a person’s cognitive abilities – and in turn, leave them unable to manage their own finances. This is one of the primary benefits to taking control of your parents’ finances.
In addition to decline in cognitive ability, another primary benefit of taking control of your parents’ finances is the susceptibility of elders to various scams, such as online requests for money from people posing as relatives. The FBI has compiled a list of common scams directed at the elderly.
When Should You Take Control of Your Parents’ Finances: Choosing the Right Time
Choosing the appropriate time to take over your parents’ financial matters can be difficult. However, there are many signs that you can pick up on that will indicate when the time has come:
- Unopened mail cluttering their house
- Impulsive decisions, such as excessive gambling
- Inability to write out checks and/or pay bills online
Forgetfulness: What to Look For
We all tend to forget minor details from time to time, whether that is where we left our cell phone or where we left our car keys. However, if you begin to notice that your parent and/or parents become particularly forgetful – as in forgetting to pay bills, forgetting recent conversations, or even something such as leaving the stove on unattended, then it is likely time to consider taking control of their finances.
As referenced above, as we age, our cognitive ability tends to decline. It is important that you recognize this decline as your parents age so you can take control of their finances at the appropriate time.
Unopened Mail: A Warning Sign
If your parents have an excessive amount of unopened mail cluttering their home, this is a major warning sign that they may no longer be able to handle their finances on their own. This mail can include bills that need to be paid or notices from the bank.
If you begin to notice your parents making impulsive decisions, such as gambling to an extent that they previously did not before, then it very well may be time to take control of their finances.
Inability to Write Checks and Pay Bills Online
Beyond cognitive ability, as we age, our physical structure declines as well. If you notice your parents having difficulty completing simple tasks such as writing out a check, then the time has come to take over their finances.
How to Take Control of Your Parents’ Finances
Now that we have covered why and when you should take control of your parents’ finances, it is important to know how to execute the process. There are four major steps you can take, with each explained in further detail below:
- Use credit reports and tax returns to learn about your parents’ financial situation
- Sort out and pay their bills
- Understanding your role as Financial Power of Attorney
- Keep track of all financial matters
Learning About the Situation
Using credit reports and tax returns is a good way to gain a better understanding of your parents’ financial situation. You will be able to get a better idea of their income, as well as any assets, liabilities and debts.
Sort Out and Pay Bills
It is imperative that you sort out all of your parents’ unpaid bills and create a plan to pay them off. Whether these are recent bills, past due or in collections, the bills still need to be paid. This highlights the need to discuss taking over your parents’ finances with them before it gets to the point where they are no longer able to do it.
Financial Power of Attorney: Understanding Your Role
The process can be made much easier if your parents name you Financial Power of Attorney. This will allow you the opportunity to take control of the finances when necessary and handle matters accordingly.
Keep Track of All Financial Matters
It is important that you keep up with your parents’ financial situation upon taking control of their finances. Although it can be stressful, you do not want the situation to become even worse by falling behind on bills.
Whether the time has come yet or not, it is always helpful to keep in mind when you should take over your parents’ finances. By being proactive and discussing the topic before it gets too late, you can help prepare yourself to manage your parents’ finances when they are no longer able to do so for themselves. For more information regarding elder law, contact us today.