Helping Seniors Manage Money and Finances

Offering to help aging parents manage their finances may feel as awkward as talking about sex with them, but it’s a discussion adult children need to have. If one of your parents has a stroke or an incapacitating accident, you may find yourself responsible for their mortgage, investments and bills until they recover. If you talk with them in advance and make plans for disaster, it will mean less stress for everyone when trouble finally comes. If your parents don’t have incapacitating diseases, you still should monitoring their money spending pattern because elderly parents can inadvertently spend so much money on useless thing, losing all their lifelong savings. Caregivers should be particularly vigilant about elder people’s spendings on special occasions such as easter, christmas to ensure the holidays are spent in good spirit.

Monitoring Senior’s Christmas Shopping

Caregivers are urged to keep a close watch on an elderly loved one’s checkbook and finances throughout the holiday season. Professional scam artists are out to prey on unsuspecting and trusting older people. But criminal activity is only part of the problem. Elderly persons with some form of dementia or memory loss can easily lose life savings or drain a personal checking account with uncontrollable spending habits.

Places Where an Elderly Person is Likely to Overspend

Elderly persons, particularly patients with Alzheimer’s disease, may be prone to overspending or may be guilty of giving too much money away to charity. Many churches and organizations typically ask for money donations during the holiday season when consumers are feeling generous. How is an elderly person likely to lose money during the Christmas season?

  • Mail order catalogues
  • Charity contributions
  • Church donations
  • School fundraisers (Children selling candy and magazine subscriptions door-to-door)
  • Television marketing shows or holiday product ads
  • Online email offers
  • Spam email that can lead to ID theft and loss of savings
  • Telemarketing offers of products or holiday home repair
  • Store sales events

Caregivers are Advised to Watch for Unusual Spending Habits and Take Action

It’s not enough to balance the elderly person’s checkbook at the end of the week or month. By the time a contribution is confirmed or a check is cashed, it is usually too late to recover the loss. Online banking makes it easy to keep tabs on a person’s account. Check daily or more often for any sign of unusual spending activity.

Keep a record of the elderly person’s credit cards. To prevent an aging family member from taking advantage of the constant stream of credit card offers or insurance offers that arrive in the mail, choose to opt out of the mailings. Visit the Consumer Credit Reporting Industry website and enter the aged person’s information. Stop telemarketers from calling. Prevent sales pitches for holiday home repairs and everything else all year long. Enter the elderly person’s phone number in the National Do Not Call Registry.

Talking Money With Your Parents

If your parents bring up the subject of retirement or power of attorney, seize the moment and ask what they have planned for themselves. If that doesn’t work, you can bring it up indirectly: tell them you’re drafting a retirement plan and ask about theirs.

A more direct step is to ask a trusted family friend to broach the subject or bring your brothers and sisters in on the discussion. Definitely talk to your siblings about what you have in mind so that they’re not surprised.

If you have to go it alone, you might find it easier to tell your parents your concerns by e-mail, so you don’t have to look them in the eye the first time you bring it up.

Write Down Your Concerns

If you have to talk to your parents alone, write out what you need to say in advance. Go over it several times to make sure you’ve covered everything, then test the presentation on a trial audience to see how it sounds. Practice enough that you don’t have to keep checking the notes during the real meeting.

Respecting Your Parents’ Wishes

Make it clear to your parents that you’re not trying to take over their life, dictate who they leave the house to or lecture them on how much they spend on eBay. You simply want to make sure they have everything in place for a wonderful retirement and that you have the authority to help if trouble develops.

Your Parents’ Finances

Remind your parents that with good estate-planning, they can pass on more of what they have built up in life, whether they give it to their children, their grandchildren or charity. Point out that a living will and a clear statement of their intent could avoid nightmarish family battles over whether to disconnect life support. Even something as simple as instructions on where to find all their important papers – life insurance, Social Security numbers, lists of stocks, bonds and real estate they own – could make helping in a crisis much easier.

If Your Parents Say No

Your parents may refuse your help. They may decide there’s no need to think about this yet, and they may become indignant you’re asking so many questions about their finances.

If this is the case, don’t pressure or browbeat them. If they’re still independent and in control of their faculties and their lives, you have no authority to make them update their will or divulge their financial secrets.

At that point, you will have to decide whether you should give up; try again later after they’ve had time to think or call in family or friends for support. You know best what will work with your parents.

Understanding Your Parents

For the best results, do not assume you know what your parents think, how they feel or what they want. You want the best for them, but remember, it is their prerogative to define what “the best” means in their life. Make it clear you understand that, and that you are not trying to take over, only to help.

What Else can Caregivers Do to Ensure an Elderly Person’s Financial Security?

There are a few more steps a caregiver can take to protect an elderly family member. Caregivers and families need to know how to ensure the elderly person’s safety as well as protect his or her finances.

Be aware of elderly romance scams. What better time to take advantage of a lonely elderly person than during the holidays? Also known as black widow scams, the elder is befriended or romanced into a relationship. Once the perpetrator gains the victim’s trust, he begins stealing property, money, and savings. Elderly loved ones and their caregivers can easily become victims of ID theft.

Elderly people can be forgetful and inattentive, particularly those affected by memory loss or dementia. Odd or unusual spending habits may be a sign of early Alzheimer’s disease. Caregivers are urged to keep a close watch on an aging loved one’s financial accounts, especially during the holiday season. Report criminal activity immediately and take further action to protect the elderly person from identity theft, phishing scams, and financial ruin.

What’s the safest measure to prevent Grandma from making a hefty donation to a charity that may or may not be legitimate? Offer to take over the elderly person’s finances or at least assume more responsibility for spending activity.

If no prior arrangements have been made regarding financial matters and the elder can no longer make sound decisions, then a family member may have to seek conservatorship.

What is a Conservatorship?

A conservatorship provides the legal authority to manage a person’s finances, estate, personal affairs, assets and medical care. In order to obtain a conservatorship, a friend, family member or public official must petition the court with facts about why the individual can no longer manage financial or personal affairs. As it applies to persons of advanced age, a conservatorship takes away a person’s basic rights to freedom of choice by removing the elderly person’s power to make financial and personal care decisions.

There are two types of conservatorships:

  • Probate. The petition can be filed by an adult child, relative, or person outside the family. The court decides the extent of the conservator’s power.
  • LPS (Lanterman, Petris, Short Act). Designed for people with serious mental disorders or who may be mentally impaired by drug or alcohol addiction. Family and friends are not allowed to submit a petition as conservator.

A Guardian’s Obligations

A guardian or conservator is obligated to use parents’ money for parents’ needs. Guardian also assumes responsibility for parents’ care, health and safety and that parents enjoy all “personal, civil and human rights” they’re entitled to.

Guardianship has advantages over a power of attorney. It’s much harder to revoke a guardianship, which gives guardian more authority to protect parents from a scheming lover or a con man. If your parents are already incapacitated—by an accident, say—it may be the only way you can obtain the power to help them.

The Process of Conservatorship – Taking Away an Elderly Person’s Rights

The default assumption is that anyone over 18 is competent to take care of themselves, so if you want an involuntary guardianship, the burden of proof is on you. Even if your father is blowing his retirement fund to gamble and take girlfriends on luxury vacations, foolish spending isn’t grounds for the courts to give you control of his checkbook. If your parents are even minimally competent, the chance of securing guardianship is slim—and the chance of alienating your parents by trying is very high.

To secure involuntary guardianship requires a court hearing to determine competency. Your expenses will include an attorney and possibly psychiatrists, social workers and investigators to review the case and evaluate your parents. You’ll receive guardianship if the court finds your parents can’t make informed decisions on personal or financial matters and that failure to appoint a guardian would create an unreasonable risk to your parents’ health and safety.

Even if the judge decides to appoint a guardian, the judge isn’t required to give you that power, or even a member of your family. And you will have to make regular reports to the court to make sure you’re not abusing your authority.

Alternatives to Conservatorship

Persons of advanced age who are still mentally competent are strongly urged to complete a durable power of attorney (DPA) and a durable power of attorney for healthcare (DPAHC). By signing these documents, the elderly person gives a designated individual (of his or her own choosing) authority to make important legal decisions on his or her behalf.

The designated individual can only make legal decisions after the elderly person is found to be incapable – or incompetent – of managing financial matters and healthcare decisions.

To learn more about DPA and DPAHC procedures, consult an attorney experienced in matters specific to elderly persons (i.e. Medicaid, Social Security, Wills, estates, geriatric issues).

There are several ways to locate an attorney:

  • County Bar Association
  • Legal Aid office
  • Recommendation from a friend or relative
  • Senior support groups
  • Phone Book (Attorneys are listed in alphabetical order and according to a specialty in the yellow pages)

Other alternatives to conservatorship:

  • A court-appointed “Representative Payee” to manage Social Security Benefits
  • Joint management of bank accounts and other legal securities
  • Setting up joint ownership of assets

The elderly person should be warned that allowing the wrong person to jointly manage personal affairs may prove disastrous.

The Process of Designating a Conservator

Designation of a conservator is made by a judge at a hearing process. The details are complex when one is appointed to manage another person’s affairs and is given the power to make healthcare decisions. Petitioners should know that any decisions made on behalf of the elderly client are court-supervised. According to information provided in the same Family Caregiver Alliance article, the conservatee’s (elderly client’s) assets and income become part of the public record. A person appointed as conservator of an elderly person’s or family member’s estate must file an inventory of the conservatee’s property. The petitioner must keep records and submit evidence of all transactions. And finally, the cost of the entire legal procedure may be quite expensive.

A discussion of an elderly individual’s affairs may be difficult for the family to endure. However, the consequences of not settling certain health and financial matters while the elderly loved one is still competent can result in costly and stressful court litigation later on. The elderly person who currently is able to manage his or her health and financial matters has the power to avoid the conservatorship. Most people would prefer to avoid petitioning for conservatorship, using it only as a last resort. The strongest option to protect one’s basic rights is to complete the DPA and DPAHC forms. Acting before it’s too late ensures peace of mind.