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How to Assist a Loved One with Financial Matters in Their Later Years

By Jim Davis, Certified Public Accountant

It is difficult to watch family members age and begin to struggle with handling routine financial matters or making financial decisions that appear risky or questionable. Approaching an elderly family member with these concerns and offering assistance can lead to a stressful conversation.  The idea of having others—even family members—provide assistance in personal financial matters is difficult for most of us. This is especially true for seniors where asking for or receiving help may seem like giving up some of their independence. While it may take several conservations before your family member allows you to assist, the end result should provide them a sense of security relating to financial issues. If you are or could be in this situation, I have listed below some thoughts and considerations which I hope will prove useful:

1. Communication—It is important that you understand their goals and needs and that you assure them that you will respect their wishes when acting on their behalf. That means you must be prepared to do things differently than you ordinarily would do them. Follow their instructions as long as the action your family member wishes you to take is not illegal or does not involve a scam or risky venture. It is important that you periodically keep them informed of actions you are taking and the status of their financial accounts. This will help increase the trust they put in you and will lessen their feelings of inadequacy. Also, it is important that other family members are aware of the role you are performing so as lessen potential misunderstandings down the road.

2. Inventory of assets and debt—One of the first steps you should take as you start assisting your family member is to do an inventory of their assets, such as bank accounts, brokerage accounts, vehicles, real estate, etc., and of what, if any debt they owe. In addition, a listing of income and monthly expenses along with the inventory will show what is available (income and assets) to meet their debt and other obligations. This inventory should also give you a good picture of how much help your family member really needs. They may only need someone to guide them or confirm that they are doing things correctly. If they are months behind on payments, haven’t opened mail and become overwhelmed talking about finances, they likely need you to do most of the work.

3. Simplify—If you can move your family member from a complex financial situation to one that is simpler in nature, handling financial matters will become easier and allow for meaningful conversations with your family member regarding their finances. Simplifying means having all accounts at one bank, taking advantage of automatic payments, paying off any debt as quickly as feasible, etc. The more your loved one is involved, the less potential for misunderstandings or disagreements. It is possible that once their financial matters are simplified, he or she can manage the day to day handling of their finances for several more years. Remain close by during an agreed upon trial period and check in with them regularly.

4. Estate documents—In assisting your family members, you should review their files to determine that they have current documents that will assist them as they age and provide a smooth handling of their estate upon their death. A Durable Power of Attorney is essential to handling family member’s affairs once they are no longer able to act on their own behalf. A Will or Trust provides for the smooth handling of a family member’s estate upon their death. During this review, it would be useful to check to see if beneficiaries of life insurance and retirement accounts are accurate. Also, for bank or brokerage accounts the use of “transfer-on-death” designations (POD or TOD) may prove useful in the transfer of these accounts upon the death of a family member.

5. Visit a financial planner or estate attorney—If your family member’s financial matters appear complicated or you feel uncomfortable with an issue, seek some expert advice. You should not put yourself in a situation that you do not feeling comfortable handling. Remember that you are not handling your own financial affairs, so to err on the side of caution is likely correct.

You will find that assisting senior family members in times of need provides not only a needed service to loved ones but will enrich you as you plan for your later years. Proceed slowly and expect some resistance, but the end result will ease the stress for your elderly family members during the later days of their lives.