4 Tips For Managing An Aging Parent’s Finances

If you need to take over the financial duties of an aging parent, these are the steps you need to take.

by Daniel Kurt
Geo Barnett for Fatherly

My mother-in-law is declining in health, so much so that my wife and I need to manage her finances for her. My MIL was always the one to deal with the family finances and everything is in decent shape (I think) but what do I need to know about managing her finances now that she’s older? Do we need to become her guardian? Should we make better investments on her behalf?

We’re luckier than most. She has enough money where she doesn’t qualify for Medicaid and has plenty of money from my father-in-law’s life insurance – he died five years ago – but what do we need to know about taking control of her assets? Mitchell, via email

Elder care if extremely difficult. The best option here is likely getting your mother-in-law to draft a power of attorney (POA), a document that would give someone else – the “attorney-in-fact” – authorization to manage financial and other legal issues on her behalf. If your mother-in-law is in bad enough health that she can’t reasonably handle her own investments and bank accounts, it’s a good idea to act on this now. Otherwise, things become a lot trickier.

Once your mother-in-law is too feeble to sign a form giving you guys — or another trusted adult — control over these matters, it’s too late. Any financial decisions you’d may need to make, like selling assets to pay for her care, become a whole lot more complicated.

“You definitely need to get it done before she becomes incapacitated,” says Adam Beaty, owner of Bullogic Wealth Management in Pearland, Texas “Once that happens, you can no longer get a power of attorney.” Should she become physically or mentally unable to sign a POA, things get a whole lot more complicated. You can still petition the courts to name you or your wife as her guardian – or conservator, as it’s called in some states. That, too, would enable you to manage her financial affairs. But this is a hairier, and potentially, expensive process. There’s also no guarantee the judge will give one of you, and not another member of the family or a friend, that role.

Needless to say, getting that POA in order is a much wiser move. Sometimes, the most difficult part is convincing an aging parent (or in-law) to relinquish control over their affairs. Hopefully your mother-in-law is clear-eyed about what she’s realistically able to do or not do, which would make the whole situation a lot easier. But it’s time to have an open, honest conversation sooner than later. Assuming you can get her to see the need for a POA, here are some steps you’ll want to make to avoid unnecessary hassles down the road.

4 Tips For Managing an Aging Parent’s Finances

1. Seek Out a Lawyer.

Sure, your mother-in-law can establish POA on her own. But in reality, the process is never as simple as it appears. A good attorney who specializes in elder care issues can help clients steer clear of potholes before they fall right into one, says Beaty.

If your mother-in-law is in good enough condition, you and your wife might want to accompany her to the lawyer’s office, or arrange for one to visit her at home. The attorney will be able to craft the POA to meet your family member’s specific needs. In this case, that probably means setting up a “durable” power-of-attorney that will stay in effect until her passing.

2. Figure Out Their Real Estate Holdings.

POAs give you fairly broad authority over retirement and brokerage assets, as well as bank accounts. But when it comes to making decisions regarding real estate, it’s a different matter, says Beaty. Any properties need to be listed in the document; otherwise they might be out of your control. Make sure the document includes the address of those real estate holdings and clearly spells out the powers being given to the attorney-in-fact.

3. Contact Her Financial Institutions.

Some depository banks and custodial firms — the companies that actually hold one’s investment assets — have special forms or procedures enabling another adult to act as an agent for the account owner. So, as big a pain as it is, you really need to contact each of those institutions and get that information. Delaying matters too long will only make things worse.

Sometimes a dispute can arise when another person shows up with a signed POA for the same accountholder, something that often end up being litigated in the courts. “People think once the document is written out that it’s done,” says Beaty. “They usually find out when it’s too late that the custodian is not going to accept it.”

You can minimize the risk of those disputes by submitting a POA to the custodian first, says Beaty. Then reauthorize the document with a notarized signature every year to clarify the intent of the accountholder.

4. Get Organized

Having a legal document granting you legal authority over her assets is great. But it doesn’t do much good if you don’t know what those assets are. In addition to the POA itself, you should also get your mother-in-law to organize her bank, investment and real estate documents, as well as any usernames and passwords that will allow you to manage her assets remotely. Too often, that information isn’t kept in a single location where the agent knows where to find it. “Accounts go missing because nobody even knew they existed,” says Beaty.

Look, dealing with the physical decline of someone you love is tough enough. By being proactive about her financial matters, at least you’re not compounding the grief.