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Helping the elderly with their finances

06.18.21
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Personal finances can be hard to manage at any age, but it can be especially difficult for the elderly as they deal with cognitive decline, memory loss and possibly dementia. On top of managing finances, elderly are also at increased risk for financial abuse. At some point, you may be tasked to help an elderly loved one to manage their finances. If you find yourself in this situation, here are a few things you can do to make it easier on everyone.

Gather all necessary information

It’s best to start by gathering information. Work with them to create a document that has their basic financial information in one place. This document should include:

  • Bank account information
  • Insurance information
  • A list of monthly bills (mortgage, car payments, utility bills, etc.)
  • Online account information including usernames and passwords

This information should be kept somewhere secure, like a fire-resistant box, and only trustworthy people should be informed of its location. Having this information in one place will help you access their accounts if they’re no longer able.

Simplify their finances

You likely have a lot on your plate and have to deal with your own finances. Work with your loved one to simplify their finances so it’s easier for you to manage.

  • Embrace digital - There are many tools to help manage money and pay bills. Help them set up digital banking for their accounts. This will allow them to easily track expenses, monitor for fraud and even pay bills. Setting up automatic bill pay will also help simplify their finances as they don’t have to worry about missing payments.
  • Consolidate accounts – It may be best to consolidate accounts if possible. Do they have accounts at multiple banks or a few different investment accounts? Consolidating accounts will make it easier for you to keep track.

Monitor their finances

The elderly are vulnerable to financial abuse and monitoring their finances is the easiest way to prevent it. Monitoring their finances is also a great first step as you can collaborate while they maintain financial independence. Here are a few tips:

  • Review their bank statements once a month to get a sense of their usual activity
  • Keep track of their monthly income and expenses
  • Confirm that there is no unopened mail, or second notices, as these can be signs of cognitive decline and missed payments

Get legal documents in order

It’s always best to be prepared if your elderly loved one becomes mentally incapacitated. Appointing a Power of Attorney (POA) will ensure that someone is able to act on their behalf when they are no longer able. A POA document is necessary for someone to make financial decisions on their behalf and sign checks. This will be critical if they can’t make their own financial decisions and need help paying bills or managing investments and retirement accounts.

It is important to understand that legal documents provide certain levels of authority or “powers” at different times. For example, a POA document is no longer valid after your loved one is deceased. Working with an attorney can help you plan how your loved one’s finances can be accessible after death and how funeral costs can be paid. An attorney can also advise you on the benefits of setting up a trust account. Your loved one will want to ensure that beneficiaries are listed on all bank and investment accounts to prevent funds from having to go through probate.

Educate them about scams

Scams targeting the elderly are becoming more common. The common scams include romance, IRS, lottery, and pleas for help. Remind the elderly not to give out passwords, PINs, credit cards or account information over the phone or to people they don’t know. Phone scammers are skilled in sounding legitimate and can gather enough personal information to commit fraud. It’s not uncommon for phone scammers to pose as someone calling on behalf of grandchildren who are in trouble asking for money. A good rule of thumb is to not answer calls from unknown numbers.

They should also watch for emails requesting personal information and suspicious links. Emails claiming to be from the IRS, social security, their bank, or a family member are also common. We should all be suspicious of someone asking for immediate payment. Instruct them to call you if they feel uneasy or if something feels out of the ordinary. For more information, check out our Three Ways to Prevent Elder Financial Abuse article.

Get help

If your loved one has a relationship with a Certified Financial Planner (CFP) or any other professional advisor, it would be wise to set something up with them. They can help guide your decision making as you may feel that you are not in the best emotional state to be making financial decisions for someone else. Seeing a professional is also a good idea if you have power of attorney or are acting as trustee. They will help ensure any financial decisions you make are in the best interest of your loved one.

Keep family informed

Money is a sensitive topic. To avoid conflict and arguments down the road, be transparent. It’s important to let family members know that you are assisting your loved one with their finances. It would be good to involve other family members as needed to help make sure nothing falls through the cracks. Keep family members informed as things progress.