10 Ways to Prepare to Help Your Parents Manage Their Finances

10 Ways to Prepare to Help Your Parents Manage Their Finances

by Michelle Kaminsky, Esq., October 2017


Stepping in to help manage a parent's finances is a big decision and an even bigger responsibility. Depending on the circumstances, it can be difficult to know the right time to provide assistance, but there's no time like the present to start preparing for the day your parent(s) may need a caregiver and/or financial manager.

What you'll need to do (and when, and how) will vary, depending on whether you still have both your parents—either living together or living apart, or remarried to other people. Perhaps, as a couple, your parents were totally on top of their financial situation, yet after one parent's death, the other parent is unprepared to assume the duties and you'll find yourself stepping in to assist.

Your appropriate courses of action also will vary based on your parent's mental capacity or other health issues. Happily, there are 10 things you can start doing now to make sure you're ready, as needed, to help handle your parent's finances as seamlessly as possible.

1. Talk

Start the conversation about your parent's finances now and work to keep the lines of communication open. None of us likes to imagine a time when we aren't in control of our mental faculties, but it's important to approach the subject with an aging parent while he is still capable of decision-making. Having the tough talk now means you can formulate a plan together instead of having to do so unilaterally down the line.

Once the topic is broached, keep in close contact with your parent so you can notice any signals that it's time for you to put your plan in action—e.g., stacks of bills being unpaid if you're close enough to drop by and visit—and also help ensure no one is taking advantage of him or her.

2. Durable Power of Attorney

One of the most important legal documents to execute now is a durable power of attorney. When signed by your parent with you named as the attorney-in-fact/agent, this document gives you the authority to make financial decisions immediately or when a specified event occurs—incapacitation, hospitalization, or even when your parent is leaving the country.

Without this in place, should your parent unexpectedly need someone to take over his or her affairs, a court would appoint someone—and it may not be you.

3. Estate Planning

A last will and testament can save a grieving family from a lot of stress and heartache in the long run and can help you get financial considerations in order now, too.

Your parent may consider a living trust and name you as the successor trustee, allowing you to jump in and take over control of the trust's assets without court intervention.

4. Financial Overview

Gather together important financial documents to create a complete overview of your parent's finances so that you're ready to hit the ground running later.

You should know about and have documentation for all assets, investments, bank statements, retirement accounts, taxes, insurance policies, and debts. Keep all the crucial documents, along with online logins and passwords, together in a safe place.

5. Budgeting

Even if your parent is still able to control her finances, she may be having trouble meeting financial obligations. You could try your hand at helping her manage her expenses or introduce her to some resources such as Mint or BudgetPulse, depending on how well you think she might adapt to such assistance.

6. Streamline

If your parent's financial accounts aren't online yet, you could set those up. Direct deposits of income and auto-pay for regular bills can be helpful for your parent now and for you later, should you have to take things over.

7. Family Help

If there are other family members who can help, especially siblings, you may want to ask for help—not only to lighten the load but also to avoid any hurt feelings later if you think someone might feel left out of the decision-making.

8. Teamwork

Your parent's current financial advisors, attorneys, accountants, and other professionals are your allies in ensuring your parent's financial security. At the very least, gather all their contact information; scheduling meetings with them and your parent may be useful as well.

9. Hired Help

If it seems like the undertaking is too much for you, or even if you'd simply like some distance from managing your parent's finances, hire a financial planner and/or money manager to take some of the pressure off.

10. Just Do It

Act sooner rather than later. It's much more likely that you will wish you had stepped in sooner, rather than regretting that you got involved too early.