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If you’ve been digging in to conversations with aging family members about managing their finances and they need help, you may have come to a point where they want some assistance. If their health is going downhill or they want someone to help manage their finances, great! You can definitely be a part of that to make their life easier.

But what exactly do you do next? Wading through someone else’s financial situation can be complicated.

We’re outlining steps to work through when taking over management of an aging family member or friend’s finances.

Working Through Finances

1. Bring someone who’s an expert into the conversation. A financial planner, elder law attorney, or a care manager are all good choices. They can provide valuable insight and state-specific information.
2. Discuss the person’s wills and trusts. Ensure that they have a will, which outlines who will administer the estate and who will inherit certain assets. A trust sets out how other funds, such as 401(k) accounts and IRAs, will be distributed. Some aging family members might set up a revocable trust, naming themselves as the trustee and the trust as the owner of the assets. One of the benefits in this approach is it includes a person named as the successor to the role of trustee when the time comes (this only applies to items covered in the trust; you will need power of attorney for other matters). They should also have a living will, which can outline a statement of their wishes for their health care in case they are unable to make decisions on their own. A living will also names a health care proxy or medical power of attorney – the people who will be charged with making those decisions.
3. Work with your aging relative or friend to pick an individual to hold power of attorney, someone who will have the right to make decisions and oversee legal and financial matters for them. The power of attorney not only identifies the person, it can identify a secondary person, as well as outline the specific responsibilities of that person as well as those items over which they cannot decide. The right choice should be someone who knows the individual well, has time to manage financial and legal paperwork and conversations, and can always ensure that any financial management decisions are in the best interest of the aging person.
4. Collect documents you will need copies of: estate planning paperwork, safe deposit box address and where the keys are, social security numbers, birth and marriage certificates, names and contact information for financial institutions, information about any pensions, life insurance or annuities, deeds to property and cemetery plots, and vehicle titles and registration.
5. Search cash flow and credit cards for recurring expenses and see if they’re necessary – are there any magazines, memberships, or other expenses where money could be saved instead if the items are no longer being used or enjoyed.
6. Check levels of life insurance – are they higher than they need to be given their current stage of life?
7. Analyze investment accounts to make sure their portfolio is balanced well – if they’re older than 70, generally their portfolio should be more conservative with less investment in stocks.
8. Consolidate financial information in one place. List all the names and numbers of banks and investing accounts, insurance information, regular bills, outstanding debts, and mortgage and car payments, etc.
9. List sources of income along with online account access information.
10. Automate regular bills that need to be paid, which will lessen the management burden.
11. Visit financial institutions together to introduce yourself and see if they will accept your power of attorney or require you both to sign the institution’s own. Meet their accountant, lawyer, and financial advisor as well.

While you’re slogging through all these details, it might be a good chance to also have conversations to warn your aging friends and family about scams or fraud situations that can happen with their money. Common occurrences include phone calls from the “IRS” asking for credit card or bank information, investment firms asking for immediate payment, and people calling on behalf of family members in trouble.

Helping senior citizens manage their finances can make a huge difference in their quality of life and protect them for many years. It’s becoming a serious topic of discussion for many families and businesses. Even new regulations have arisen because of this challenge. The Financial industry Regulatory Authority, allows a broker or financial adviser to place a 15-day hold on disbursements from a client’s account if the money manager suspects the account holder is being exploited financially. Another new rule is having a “trusted contact” added to accounts, so when a financial advisor or account manager sees something out of the ordinary, they can speak with the trusted contact to ensure it’s not fraudulent activity.

If you’re in a place where you need to learn more about helping an aging friend or family member with their finances, we’re here to help. We have deep experience you can lean on. Contact us today!