Taking Over Your Parent’s Finances? What You’ll Need to do First

April 27, 2018 by Cheryl Proska in For Individuals, For Professionals

The thought of taking over your parent’s finances can be overwhelming and create a lot of stress. As a result of that stress, it may be difficult to formulate a plan to move forward. But you don’t have to do it alone.

Here’s a step-by-step guide for how to get started — and establish a plan that makes the entire process seem less daunting and disruptive.

Step 1: Assess the problem

First, try to determine the status of your parent’s financial situation and whether they’re struggling to manage their finances.

Look for clues they may be in financial trouble. Some red flags to look for include:

  • unpaid, past-due bills
  • calls from creditors
  • piles of unopened mail from creditors, banks or utility companies (that don’t look like marketing materials), and/or
  • bounced checks.

Next, look to see if they’re spending money frivolously. Some warning signs can include:

  • extravagant purchases
  • a dramatic uptick in dining out
  • lots of packages being delivered, and/or
  • purchasing lots of items for friends or family members they’d never purchased before.
Step 2: Find out where they keep their financial records

While your parent is still of sound mind, you want to find out where you can obtain all of their vital financial records. You don’t want to have to hunt for them yourself should your parent lose the ability to recall where all of their information and paperwork are.

Do they keep their records in a bank? In a safe? On their computer? With a financial adviser or attorney? In a lockbox?

If possible obtain any combinations, computer passwords or the location of any keys you’ll need to get their information.

Step 3: Ask about power of attorney

Find out if your parent has named a power of attorney to take over their finances. If they haven’t, and your parent has become incapable of handling their own finances, you may want to seek guardianship.

Warning: Obtaining guardianship can be a long and expensive process, it’ll also require you to prove in court that your parent is no longer capable of making sound financial decisions. Since the process can be long and complex, it’s often recommended that you seek out the services of an elder law attorney. An INTERVENTION ASSOCIATES PROFESSIONAL CARE MANAGER can also help you get the process started and guide you along the way.

Step 4: When it’s time to take control, gather all their financial info

Here’s a checklist of information you’ll want to gather when it’s time to actually take over your parent’s finances once and for all:

  • Social Security statements
  • Tax returns
  • Bank statements & financial institution info
  • Investment statements & institution info
  • Retirement plan statements & institution info
  • Military benefit info
  • Loan statements
  • Mortgage statements
  • Lease info
  • Deeds
  • Health, dental and vision insurance info
  • Medicare/Medicaid info
  • Homeowner’s insurance info
  • Motor vehicle titles
  • Car insurance info
  • Monthly bills/bill pay info
  • Credit card statements
  • Union information
  • Membership info
  • Funeral info
Step 5: Determine what they owe every month (outgoing funds)

Once you have all of your parent’s financial info, make a list of all the bills they have to pay every month, and find out how they typically pay those bills (do they pay them via check, online bill pay, etc.?).

review your parents expensesTypical payments can include:

  • Mortgage
  • Utilities
  • Medical insurance
  • Dental insurance
  • Vision insurance
  • Car insurance
  • Car payments
  • Credit card payments
  • Medical/long-term care bills
  • Pharmaceuticals
  • Any membership or association fees they pay
  • Tax bills

The goal is to come up with an accurate dollar figure of how much money is headed out the door every month, and then …

Step 6: Determine what pays their bills (incoming funds)

… figure out how much money is coming in — and whether that’s enough to cover the monthly expenses.

What is your parent’s monthly income, and where is it coming from?

Hint: Don’t forget to look for investment income, disability payments and/or alimony.

Step 7: Assess their overall financial health

Determine if your parent is in a position to continue to live as they are.

If their outgoing expenses are greater than their incoming funds, it might be time to consider other housing or long-term care options.

Is there any way to trim their monthly expenses?

Step 8: Assess their physical/mental health situation

Is your parent getting the care they need? Is their insurance — or Medicare/Medicaid — covering the care they need?

If not, it may be time to consider a new long-term care or medical care plan.

Tell-tale signs their current insurance isn’t enough, include:

  • medical bills that are mounting, and/or
  • savings that are being depleted by drug or medical care costs.
Step 9: Determine if you need more help

If at any point the process of taking over you parent’s finances seems too much, it might be time to reach out to an accountant, financial planner or estate/elder law attorney for help.

Again, an INTERVENTION ASSOCIATES PROFESSIONAL CARE MANAGER can be a great guide and resource.

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