As your parents age, it can often feel like you have swapped roles. Now you’re the one taking care of everything, from scheduling Mom and Dad’s doctor’s appointments to driving them where they need to go. But even if your aging parents welcome some aspects of this role reversal—you did give them anxiety-induced heartburn all through your teen years, and turnabout is fair play—they may struggle to accept it when you start taking responsibility for their finances.
It can feel nearly impossible to balance your parents’ need for independence with your need to protect them, especially when it comes to an issue as fraught as financial decisions. But ignoring the real financial dangers facing your elderly parents could hurt you all.
Here’s what you need to know about assuming responsibility for Mom and Dad’s finances as they age.
Know when to start
When it comes to making choices regarding aging parents’ finances, many of us assume we can cross that bridge when we get to it. Rather than broach the subject before it’s needed (and get an angry “I’m not that old!” from the old man), it’s easier to wait until there is a problem.
Unfortunately, a lot can go wrong before you’re aware of a problem. In fact, an early sign of cognitive difficulties is a decline in financial capabilities. According to research published in JAMA Internal Medicine, seniors with Alzheimer’s disease or dementia were more likely to miss bill payments six years before receiving an official diagnosis.
Additionally, all seniors, no matter their cognitive abilities, are more vulnerable to scams than other age demographics. The FBI reports that more than 101,000 Americans over age 60 reported being the victim of elder fraud in 2023, losing an average of $33,915 per victim. Considering how underreported financial scams tend to be, the approximately $3.4 billion in reported losses to elder fraud in 2023 is most likely an underestimate.
Waiting until you know your aging parents are struggling with their finances can cost them. So as uncomfortable as the subject may be, it’s wise to bring it up before you think it’s necessary.
Create an inventory of accounts
Tracking down the information for various accounts when the primary account holder is unavailable can be both logistically and emotionally overwhelming. That’s why it’s a good idea to start with an account inventory. You can couch this as an activity you do together, since it’s important for everyone, no matter their age, to make the information available in case of an emergency.
Specifically, you will want to create a list of all your parents’ (and your own) financial accounts, loans, and regular bills, including login credentials. If your parents are uncomfortable sharing login information, you can consider sharing a password manager. These programs allow you to share passwords and appoint digital legacy managers (i.e., individuals who have access after you become incapacitated).
Get legal permission
When it comes to taking care of your aging parents’ finances, having access to your parents’ accounts does not mean you have the legal right to pay bills or make decisions on their behalf. To do that, you will need to take on one of the following roles:
- Joint account holder: Getting added to your parents’ account as a joint account holder allows you to access the account, make deposits and withdrawals, write checks, and pay bills. This option is relatively easy to implement, but it can potentially affect your parents’ eligibility for Medicaid or your child’s eligibility for college financial aid.
- Trustee: As the trustee of your parents’ living trust, you will have the ability to manage any accounts, funds, or property within the trust. However, anything outside of the trust (such as utility payments) must still be handled by the account holder. Setting up a living trust can also be more onerous than adding you as a joint account holder.
- Power of attorney: While your parents are compos mentis, they can name you as their agent under power of attorney. This allows you to access their financial accounts and make legal and financial decisions on their behalf. General durable power of attorney goes into effect immediately and stays in effect if your parents become incapacitated.
- Court-appointed conservator or guardian: If your parents are no longer able to make decisions on their own behalf, you will need to petition the court to be named as conservator or guardian. This process can take time and will cost money, so it’s better to get Mom and Dad’s buy-in before this is needed.
Mom, Dad, and Money
Taking over the financial tasks and decisions for your aging parents will probably feel uncomfortable for everyone involved. But your parents will likely need your help with managing their money—and they may not know how to ask.
Start the conversation early, before you think Mom and Dad need any help. Beginning with an inventory of accounts—both yours and theirs—can prepare the entire family for potential emergencies. From there, you can discuss what legal permissions you might need in the future. You and your parents will be glad you did.