When Adult Children Become Responsible For Parents’ Finances

August 24, 2018 0

Mom is missing payments and dad can’t seem to write the checks correctly.

You know you need to step in and help but how do you do this without stepping on their toes?

At some point or another, if you are an adult child, it is possible that you will become responsible for your parents’ finances.

Whenever money is involved, things get sticky and volatile very fast.

Unless there is an original, agreed upon plan.

In this post, we will talk about easy ways to help your elderly parents manage their finances without making them feel they have lost control.

Accept that it is a difficult topic

In order to help your parents with something as sensitive as money, it is important to have an open conversation.

This conversation can involve your siblings and one or two other people you are sure your parents respect and are more likely to listen to.

In these conversations, it is always important to remind your parents that you care about them and want their well-being.

Seniors fall prey to financial scams to the tune of $3 billion each year. It therefore makes sense that your elderly parent may be wary of your offer to help.

On top of this, a decline in physical strength and health can make elderly people feel helpless. This loss of control can also make the elderly resistant to receiving any help from you.

Acknowledge all these objections when you have the discussion with them.

Have a financial plan

Once the discussion is over and they have agreed to let you help, it is time to create a financial plan.

Creating a budget always seems overwhelming for people but it is one of the best ways to track where each dollar earned goes so that there is less waste.

You can make a budget in a notebook or use one of the many cell phone apps that help you budget.

It does not matter which method you choose. What matters is that you stick to the plan.

Items to consider on the budget include:

  • Rent/mortgage
  • Food
  • Clothing
  • Utility bills- phone, electricity, water, gas, internet
  • Home care costs- where applicable

Once all the essential items on the list are taken care of, extra money can be put towards your parents’ savings.

A portion of that can even be used for entertainment!

Transparency is important

Transparency is critical when it comes to taking over your parents’ finances.

I already mentioned that there might be some initial mistrust in allowing someone else to control their finances.

This, it is important for you to be transparent and communicate clearly where each penny is going.

  • Show your parents physical or digital receipts of payments you have made in their name.
  • Take them with you to the rental office when you drop off the rent.
  • Let them get on the phone with the utility company so they can double-check to make sure they got that month’s payment.

These may sound a little extreme, but any length you can go to show your parents that you are honest in your efforts to help them is worth it.

A point to note about financial abuse

Elder abuse can involve money too.

The stories of wealthy elders being taken advantage of by close relatives due to failing health is real and more common than you think.

And while this will be the topic of another blog post, if you are an adult child who suspects that your parent is at the receiving end of this abuse, there is hope.

This is where estate planning (another upcoming blog post topic!) becomes crucial.

Making documented plans ahead of time with an attorney helps to limit financial abuse by placing the right people in charge of managing their parents’ money.

Encourage your elderly parent’s to start estate planning now.

Closing Thoughts

No matter how you slice it, money is always a sticky topic.

Managing money for your parents when they are longer able to can be an even stickier subject.

However, with the right conversation and correct planning, adult children can become responsible for their parents’ finances without drama.

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