Helping Aging Adults Organize Their Finances

As our parents and beloved family members reach their later years, getting their financial affairs in good order becomes increasingly important. While talking about finances can be awkward, it’s important to have these conversations when older adults are physically and mentally well, and you can be sure their choices aren’t driven by the fear or anxiety that a health crisis can cause. 

Starting the conversation early also allows for them to pause as needed to get comfortable with the idea of sharing their financial information. It’s important to convey that the purpose of the discussion is to protect their well-being, support their retirement plans, and helping them manage their finances for the future.

You may find it helpful to initiate any discussion by sharing thoughts on your own finances and plans for the future. As you move into their finances, explain that you want to understand and ensure their wishes are followed. If you have siblings or there are other family members involved in your family member’s finances, speak with them first about any potential discussion. It’s important that you’re all on the same page about the purpose of the discussion and who will taking the lead. Having multiple people suddenly inquiring about finances can be distressing and may even work to shut down any meaningful conversation before it even begins.

If you’re serving as the point person, here are some things you may want to accomplish over time.

Get a handle on income sources and recurring Expenses

Make a detailed list of all income sources like Social Security, pensions, investment income, etc. Then list their recurring expenses like mortgage/rent, utilities, insurance premiums, etc. Understanding their obligations will help you avoid surprises while planning for the future.

Gather important documents and related info

The first step is to locate and organize all of your loved ones' important financial records and legal documents. This includes:

– Bank and investment account statements

– Deeds and mortgage documents for any real estate

– Insurance policies (life, health, long-term care, home, auto)

– Pension and Social Security payment information

– Wills, trusts, and powers of attorney

– Usernames and passwords for online accounts. If they’re using biometric access—fingerprints or facial recognition—encourage them to switch to passwords as biometric access can be an obstacle to accessing accounts when someone’s passed.

Having all of this information in one place will give you a complete picture of their finances and assets.

Simplify and consolidate accounts

Older adults often have accounts spread across many different institutions. Consider consolidating accounts to better manage their money, automate payments and deposits, and monitor for fraud or financial exploitation.

Ensure proper beneficiaries are listed

Review all investment accounts, life insurance policies, etc. and ensure the proper beneficiaries are listed to avoid probate later. If there are trusts, make sure they are properly funded.

Make sure power of attorney and health care proxies are in place

Your loved one should legally designate someone as having “durable power of attorney,” which allows them to make decisions regarding their other finances. While it doesn’t not have to be a family member, you do want to make sure this individual can be trusted to act in your loved ones’ best interest and that other members of the family know who holds this responsibility. Once named, this individual should keep careful records of and document all financial transactions. The more detailed the better as this may help mitigate disputes later.

Your loved one will also need to designate a “health care proxy.” This individual is empowered to make heath care decisions on behalf of your loved one should they not be capable of doing so themselves. The health care proxy should plan to have some serious heart-to-heart discussions regarding end-of-life care, DNRs, etc. These discussions can be challenging. If possible, it’s best to take them slow and give everyone time to be thoughtful and certain about their choices.

Discuss bill paying and account monitoring

As cognitive skills decline, your loved one may need help paying bills on time and monitoring accounts for fraud or suspicious activity. Determine if and when you may need to assist with these tasks or take over completely through powers of attorney.

Give consent to financial advisors

Have your parent or loved one provide consent for you to speak with their financial advisor, accountant, insurance agent, and other professionals. This will allow you to remain in the loop on their complete financial situation.

Make sure there’s a will

All adults should have a will. A clear expression of their wishes, a will helps prevent costly, time-consuming, and emotionally draining disputes over the distribution of assets. A will is the only way to designate the person to administer an estate.

Discuss long-term care needs, costs and desires

One of the biggest concerns is how to pay for long-term care if needed, which could include in-home care, assisted living, or nursing home costs. Explore options like long-term care insurance, life insurance policy loans, or using home equity. These discussions often require navigating the realities of what an individual wants for late-in-life care and what’s realistic for their budget. Again, if possible, take your time considering options and reaching decisions.

Getting your loved ones' finances organized is an important but loving responsibility. With some preparation, you can ensure your parents' money is managed according to their wishes. If you’re feeling uncertain or simply in over your head, contact an elder law attorney who can guide you through the process.

DISCLAIMER: This article is meant for educational purposes only and is not intended to be construed as financial, tax, investment or legal advice.