Taking Over the Finances of an Elderly Person

Advisory & Consulting, Strategic Accounting, Tax Services

Have you witnessed your mom, dad or grandparents having trouble managing money on a day-to-day basis? Are you worried that they may become vulnerable to scams or identity theft? What would happen if you had to suddenly take over management of your parent’s finances—paying bills and managing their money? There’s not only the day-to-day management but the annual tax returns as well.

If you legally assume control of another’s finances, you become a fiduciary, legally bound to act in their best interests. It’s critical to avoid anything that causes you to benefit personally from this arrangement.

Here are some ideas to help you protect your mom, dad, grandfather or grandmother from financial missteps:

  • Start a conversation. Sit down and talk things through. Get a list of contact information: where they bank, if they have an investment advisor. Know whom you should call and who the players are. Your job is to explain the context of what you’re trying to do. It’s not a matter of control, but that you want to protect them from potential harm.
  • You may make things official by obtaining the legal authority—power of attorney—to make decisions about money and property. Reassure your parents that this may be revoked at any time, reverting decision-making back to them. Explain also that authority under a power of attorney is limited to what the document outlines.
  • You can be appointed guardian, meaning that you’d make health and other personal decisions. A court may make you a guardian of an elderly relative’s property.
  • Establishing a revocable living trust will give you the legal authority to take control of some or all assets. You’d be confined to money or property inside the trust, making decisions when your relative no longer has the capacity to do so.
  • You may see that you’re needed to manage benefit checks from the federal or state government: You can be named a representative payee or Veterans Affairs fiduciary, making sure the money goes to take care of Granddad’s needs.
  • Coach your relatives to avoid scams—you can help without threatening their autonomy. Be non-intrusive as a counselor but ask that they speak to you before making any big money decisions.

If you take on fiduciary responsibility, you will want to avoid mixing your assets with those of your relative. Also, it’s a matter of approach. Even if you’re “in charge,” be sure to involve your relative in as many decisions as possible. And remember whose money you’re managing—it’s not always up to you to decide what her best interests are. Step back if that’s what she wants. Assure her from the start that she can cancel everything if necessary. She should understand that she maintains the right and authority throughout the process.

Watching your friends or relatives struggle mentally or fall victim to scams is devastating. By helping with finances, you aim to provide peace of mind for everyone involved.

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