Taking over the finances from an elderly relative can be difficult, so here is some expert advice to help you navigate that delicate process.
We recently wrote about an uncomfortable conversation you may need to have one day when you may have an elderly relative who will need you to take an active role in their finances.
They may not agree that you need to take an active role in their finances, however, which is where the awkwardness of the conversation would likely come in. We already covered the best way to start that conversation and navigate it in a sensitive manner, but even if it goes well, that’s only the beginning.
Being a financial caregiver can be difficult, stressful, and emotionally draining. But you can also take some satisfaction in helping someone you love to survive in their old age. Here are some tips to manage a role you may not have expected to ever take on.
1. Try to be a partner.
Being a financial caregiver will be less stressful for both you and the person you’re assisting if you don’t try to take on more control than is necessary.
“The objective of parent-adult child eldercare conversations is to encourage mutually responsible partnerships,” advised Joy Loverde, author of The Complete Eldercare Planner. “Partnering with, rather than parenting our parents, is the desired approach.
“As long as our parents remain mentally able to make their own decisions, we must appreciate the limits of the parent-child relationship. Many adult children have learned the hard way that attempts to impose their opinions, values, and authority on their parents will begin a downward spiral in the communication process, leading to a breakdown in the relationship.
“When we focus our conversation style on influencing parents to seek and accept help from others, and keep them accountable for their own choices, they can remain true to their independent ideals.”
2. Get all your legal ducks in a row.
Managing legal documents can be confusing and stressful even when you have them all in front of you. The more documents are missing, the less manageable the task becomes.
“Make sure your relative has all of their legal documents in place,” recommended Renee Fry, Co-Founder and CEO of Gentreo.
“For instance, you need a power of attorney to be able to make financial decisions for the person you are helping. Without one, you can not access or transfer funds or even pay medical or other bills.
“Make sure your older relative also has a health care proxy so important decisions can be made on care or even where care can be provided.”
3. Act in their interests.
Do you want to be a caregiver or a caretaker? Wait … those actually mean similar things. How is that possible? Whatever, the point is you should try to act along with the desires of the person you’re looking after.
“Understand their intentions,” Holly Wolf, Director of Customer Engagement for SOLO Laboratories told us. “What is it they are trying to do with their money? Is it making it last until they die? Creating a legacy—for whom and why? Is it enjoying the money they have now?
“If you think they should be spending and they prefer to save, you need to understand their objectives.”
4. Look out for scams.
While you want to try and follow the elderly person’s wishes as closely as possible, the very fact that they need a financial caregiver means that they won’t always be able to make the right choices. That means you might need to act against their wishes in instances where you recognize that they’re likely being scammed.
“Make sure your elderly relative is not taken advantage of by scams or criminals who are trying to trick them into writing checks, transferring money, etc.,” warned Fry. “Set limits on spending, or require your relative to ask you first if they want to write a check or take money out of the bank.”
5. Keep a close watch.
Looking out for scams means keeping tabs on your elder, especially if they’re doing any financial tasks online.
“Monitor financial information and online usage,” urged Matt Dworetsky, president of Dworetsky Financial. “Depending on the situation, you should be involved in the financial management of your loved one.
“As people age and lose the ability to manage their own finances, they become more vulnerable to fraud. Many seniors fall victim to expensive online scams. Talk with your loved one about the importance of working together in this area to make sure everyone is protected.”
6. Seek help.
There’s no reason you should have to deal with this responsibility alone.
“Have another person involved,” recommended Wolf. “All of the people I have helped (aunt/uncle, in-laws, great aunt, parent) use an accountant that is unrelated to me. That way they have another set of eyes reviewing things to be sure I’m not doing anything wrong.”
7. Don’t forget your own finances.
In order to be a good financial caregiver, you need to have your own financial house in order.
“Your financial security comes first,” advised Dworetsky. “Do not put your future and security on the line while taking care of a loved one or you will jeopardize both of your lives if a financial emergency happens and you can’t care for either of you. Make sure you are always putting money into your savings and retirement accounts.”
It’s an important task you’ve taken on. Hopefully, these tips will make it an easier one.
Matt Dworetsky, president of Dworetsky Financial (@MDworetsky), helps clients maximize their retirement by creating personalized plans for their goals. Whether you are a federal employee, small business owner or any person looking to set up your retirement the right way, Matt will help create a legacy and plan for retirement pitfalls.
Renee Fry is the Co-Founder and CEO of Gentreo (@Gentreo), an online software provider with a mission to provide affordable, accessible and easy-to-use estate planning tools for everyone. Renee has led and helped start multiple companies, served in the Massachusetts government as head of Business and Technology and is a graduate of Harvard Business School.
Holly Wolf is an executive with over 30 years of experience in banking and healthcare.
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