Stepping In: 5 Steps for Managing your Parents’ Finances

Everyone needs some help from time to time, even the people who have been taking care of you all your life. As your parents age and are affected by declining physical or mental circumstances, you may find yourself increasingly assuming responsibility for their financial affairs. Taking on your parents’ assets and obligations can be a complex task to sort through, especially as many of you will also have families of your own to take care of. We’ve compiled this guide to help you through the process.

Secure the Proper Authority

While your parents are still well and able it is important that you arrange any necessary documents that will allow you to manage their estate and make any necessary financial decisions on their behalf. Documents such as those naming you as their agent with power of attorney, or successor trustee in their living trust will help you immensely in dealing with financial institutions, allowing you to pay bills, sign checks and handle accounts for as long as is necessary.

Collect All Relevant Financial Records

You must have a clear picture of all your parents’ assets, and you may have to investigate a little to get the full view. Ask your parents where they keep their money and look for supporting documents that provide information on their checking, investment and pension accounts and if necessary, any safety box keys so you can access their funds easily. Find out if your parents have any insurance policies taken out to figure out how much they’re paying and what benefits they’re entitled to in case they require urgent or long-term care. If they’re paying too much, or paying for irrelevant services, do away with these expenses.

Examine their wills and trusts to ensure everything is up to date and accounted for, any movement of assets or funds needs to be traced so that they can be updated on the documentation. Make sure that your parents are happy with the allocation of assets they’ve laid out. If necessary get some outside help to aid in estate planning.

Compile and Pay Bills

In order to accurately assess your parent’s ability to meet their obligations, you need to understand what they owe. Check their notices, mail and online accounts for the terms and amounts of any existing mortgage payments, utilities or other creditors. Sort payments by those longest overdue and reach out to the billing companies to establish a plan for repayment, you may need to speak to an attorney or financial expert if the bills are far beyond their means. Arrange to have recurring payments consolidated and made as simple as possible, have duplicate bills sent to you so that you can keep track of any discrepancies.

What Benefits are they Entitled to?

Look into what government assistance programs your parents qualify for, Medicaid, Medicare and social security payments can all make up a significant portion of your parents’ retirement income. Oftentimes the rules around entitlements will be complex especially for widowed or divorced pensioners, so consult with an expert if necessary to figure out how much your parent should be receiving.

Review Investments

After conducting a thorough review of your parents’ investments, including mutual funds, stocks and certificates of deposit, figure out if the risks and returns on these vehicles suit their current financial needs. If they have pressing financial concerns, you may need to move some of these assets into more liquid and less risky forms to ensure you have money when you need it. If your parents have a number of assets, you may need help with investment planning to best meet their changing financial objectives.