It can be jarring to realize that your aging parent might be having difficulty keeping up with his or her personal finances. This can seem especially daunting if you don’t live in the same part of the country as your parent.
But don’t despair. You can line up all sorts of practical help for your mom or dad, whether you live close by or far away. Consider these tips.
1. Go see for yourself. Visit your parent in person and get a sense of how the household is being managed. Be mentally prepared to talk about money, no matter how hard that may be for members of your family. You might be able to broach the subject by sharing a money-related story of your own or a story about one of your friend’s parents.
2. Be alert for red flags. Ask for your parent’s permission and assistance to examine his or her checkbook, bank statements, credit-card statements and canceled checks. Look for inappropriate or duplicate payments; failure to keep track of deposits and expenditures; numerous transfers from savings to checking; numerous payments to home-shopping networks, sweepstakes or other contests; unusually large charitable donations or payments to a person unknown to you; evidence of high credit-card debt; disconnect notices from utilities, and menacing correspondence from collection agents.
3. Recognize an emergency when you see one. If it’s obvious that your parent simply cannot cover his or her expenses, start the process of tapping into government programs for older Americans on low or fixed incomes. To find out what kind of federal and state support might exist for your parent, fill out the confidential questionnaire at BenefitsCheckup.org (http://www.benefitscheckup.org/).
4. Remember the house. If your parent owns a home, he or she could sell it, move into more modest accommodations and make up to $250,000 in profit, or double that amount if married, without owing any capital gains taxes. Or, if your parent is 62 or older, he or she could get a reverse mortgage. Such loans allow homeowners to convert home equity into cash without having to move or assume extra debt. To learn more, visit http://www.aarp.org/revmort.
5. Find a reputable financial planner. You and your parent can attain real peace of mind by putting a smart financial plan in place for the years to come. You can accomplish this by hiring a fee-only financial planner through the National Association of Personal Financial Advisors (http://www.napfa.org/) or the Garrett Planning Network (http://www.garrettplanningnetwork.com/). (Fee-only planners do not make commissions by selling you certain financial products.) Planners with the Garrett Planning Network charge an hourly rate of $150 to $300 on an as-needed basis.
6. Get key financial documents in order. Your parent’s financial planner can serve as a quarterback to help get these documents drawn up: a durable power of attorney, which would allow your parent to appoint a trustworthy person to help manage his or her finances; a durable power of attorney for health care (also known as a health-care proxy); a living will, and a will. The planner can direct your parent to an attorney who specializes in such matters if needed.
7. Hire a daily money manager. Different from long-range financial planning, daily money management involves consistent help with routine tasks, such as paying bills, keeping the checkbook balanced, establishing a budget and organizing financial and insurance records. Daily money managers generally charge $25 to $75 an hour, and many of their clients require only a few hours of help each month. To find one in your parent’s area, visit the Web site of the American Association of Daily Money Managers (http://www.aadmm.com/).
8. Look into the “representative payee” alternative. If your parent receives income from Social Security and is having difficulty managing that income, he or she can ask the Social Security Administration to appoint a representative payee to receive the monthly checks and use the money to pay his or her living expenses. This individual could be you or your parent’s daily money manager. Call (800) 772-1213 or visit http://www.socialsecurity.gov/payee/ for details.
9. Viewa guardian as a last resort. Courts appoint guardians to decide financial or personal matters for people who are unable to care for themselves. Recognize that a guardianship would deprive your parent of the right to make his or her own decisions.
10. Know where else to turn. You can track down many more services and resources for your parent through the Eldercare Locator, a nationwide assistance directory provided through the U.S. Administration on Aging. Call (800) 677-1116 or visit http://www.eldercare.gov/.