Are you starting the process of managing your aging parents’ finances? Well, you’re not alone. A recent survey reveals that 55% of Americans currently plan to assist their parents financially, which often includes managing their finances.
Managing your parents’ finances becomes much easier with the right financial tools. In this article, we’ll share resources to help you handle their finances effectively.
Key Takeaways
Managing your parents’ finances on top of your own can result in costly mistakes like missed payments, but financial tools can help prevent this.
To manage your parents’ finances with financial tools, you will need to establish power of attorney.
The best recommended financial tool is Trustworthy, which you can use to track missed payments, make payment reminders, and store account passwords.
Why You Need Tools to Manage Aging Parents’ Finances
Managing your parents' finances can be overwhelming, but using specific financial tools can help keep you on track.
Managing multiple accounts, creating budgets, overseeing investments, and making payments can be challenging. Mistakes are inevitable, especially if you balance these tasks with a full-time job or other responsibilities.
What seems like a harmless slip-up can result in late payment fees and additional interest charges.
Today’s digital tools, such as money management apps, investment trackers, and fraud alerts, make managing your parents’ finances easier and more efficient than ever.
Using Financial Power of Attorney
If you’re trying to manage your parents’ finances without some kind of legal authority, you’ll realize it’s extremely difficult. Simplify the process by having your parents appoint you as their financial power of attorney (POA).
Approaching the subject can be daunting, especially if your parents don’t like talking about finances or admitting they need help.
Cody Barbo, CEO of Trust & Will in San Diego, California, explains:
“Convincing an elderly parent to grant financial power of attorney (POA) is a delicate process that requires empathy and understanding. It’s not just about legal control. It’s about trust and ensuring their best interests are protected in moments when they may not be able to manage finances themselves.
"Start by framing the conversation around future security and empowerment rather than potential incapacity. Explain that a POA allows them to retain control by choosing someone they trust, rather than having decisions forced by the court in the absence of one.”
With a POA, you can access their financial accounts and documents and make financial decisions for them. You can also make payments, write and deposit checks, and even sell property.
Remember, for the POA to be valid, you and your parents must sign it. If your elderly parents receive Social Security benefits, you must apply directly with the Social Security Administration to become the representative payee to manage their benefits. The same applies to Medicare. You must fill out their form to be appointed as an authorized representative.
Store your POA on a secure online storage platform like Trustworthy. Trustworthy’s Family Operating System® enables you to store all your financial documents in one secure location that’s easy to organize, access, and share with your family members or financial planners.
How to Organize and Store Financial Documents Securely
Managing your parents’ finances involves dealing with numerous financial documents that must be organized and stored securely. Proper organization saves time and ensures you can quickly access important information when needed.
Key financial documents to organize include:
Bank statements for proof of income and expenses.
Documents that have your parents’ Social Security numbers.
Financial power of attorney.
Financial account details like account numbers, user names, log-in details, and contact information of the financial institutions.
Past tax returns and other tax documents.
Real estate documents.
Investment documents.
Property deeds.
Insurance policies.
Medical information like bills.
List of all assets.
Other estate planning documents, such as advance healthcare directives.
Organizing your documents into easy-to-find categories can be a real time-saver if you’re looking for errors in accounts or for specific information.
Organizing and categorizing documents doesn’t have to be an overwhelming task with Trustworthy. Trustworthy has convenient organizational Autopilot features for document filing recommendations, file name suggestions, and document summaries for faster searching. The autofiling feature makes completing documents easier, as it uses details collected from filed documents.
If you’re concerned about online dangers like data loss and unauthorized access, you can rest assured your documents will be protected with Trustworthy’s advanced security features. These include 256-bit AES encryption, two-factor authentication, and HIPAA and SOC 3 compliance to keep your information secure.
Setting Up Online Banking for Easy Access and Monitoring
To effectively manage your parents’ finances, you’ll need access to their bank accounts. This can be achieved either by using the login details they provide or by applying for access with your POA at their bank.
Some people like to appoint their children as joint account owners. However, this only grants access to accounts and not broad financial power like a POA.
Once you can access your parents’ account, you can set up online banking. Keep an eye on what payments are coming in and going out, and look for signs of financial abuse or fraud. Set up an automated payment system to ensure that payments are never late or missed.
Ensure you always have account access by storing the account passwords with Trustworthy under the dedicated password storage tab. You can limit who has access to this tab to control who can access passwords and keep track of missed payments.
Investment Tracking Tools for Your Parents’ Retirement Accounts
Supporting your parents in preparing for retirement often involves monitoring their retirement and investment accounts. Investment tracking tools can simplify this process by providing insights into portfolio performance, asset allocation, fees, and even projected account growth.
Recommended investment tracker apps include:
Personal Capital: Offers comprehensive tracking for investments and net worth.
Empower: Focuses on retirement planning with tailored recommendations.
Stock Rover: Ideal for detailed stock analysis and portfolio management.
Kubera: Helps track global assets, including investments, real estate, and cryptocurrency.
Setting Up Fraud Alerts and Credit Monitoring for Seniors
Seniors are often targeted by scammers, with the FBI’s Elder Fraud Report revealing that individuals over 60 lost more than $3.4 billion to fraudulent schemes in recent years.
Steve Kibbel, financial planner and managing editor at International Money Transfer, advises:
“Place a fraud alert on their credit report. This requires lenders to verify their identity before approving new credit. It’s free and lasts a year (but can be renewed).”
Kibbel also notes that it can be beneficial sign up for a credit-monitoring service. "Some are free, but paid services offer more comprehensive protection.”
Prevent your loved one from becoming a victim by setting up fraud alerts that go off when suspicious payments have gone off. This is a free service offered by credit bureaus Equifax, Experian, and TransUnion.
To make the fraud alert even more effective, you can set up a credit freeze as well.
Using Expense-Sharing Apps for Family Caregivers
When multiple family members are involved in caregiving, expense-sharing apps can help track spending and prevent misunderstandings. Unfortunately, elder financial abuse is more common than many realize. It might even include subtle actions like withholding change from caregiving purchases or overestimating expenses.
Trustworthy makes it easier to monitor spending and ensure transparency. With Trustworthy, you can:
Track who spent what and on which caregiving needs.
Share budgets with other caregivers to establish financial expectations.
Maintain a clear, accessible record of caregiving expenses for accountability.
Frequently Asked Questions
What are the legal protections available if my parents fall victim to financial fraud?
If your parents are victims of financial fraud, you will need to report the crime, place a credit freeze, and contact your local bank to see if you can dispute the charges.
What is considered to be financial abuse of an elder?
If you or a family member is managing your elderly parents' finances, some signs that financial abuse is taking place include misappropriation, concealment of money, and misuse of money.
What are the legal consequences of financial abuse?
If you are caught committing financial elder abuse, you can be punished with fines, restitution, and even jail time.
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Trustworthy is an online service providing legal forms and information. We are not a law firm and do not provide legal advice.
