As people live longer than ever, a growing percentage of their children are taking on the role of caregiver or financial manager for one or both parents. If you are part of the 92%of long-term caregivers providing financial caregiving for a parent, you likely felt under-prepared to take on this role. This is why experts recommend following the 40-70 rule, meaning that if you are around the age of forty and your parents are closing in on 70, now is the time to talk to them about their finances and end-of-life planning. Doing so will ensure that, when the time comes, you will be well equipped to manage their money appropriately without causing strife in the relationship.
Once you have accepted responsibility for assisting with your parents’ finances, consider the following tips to ease the burden:
Locate all important financial documents and information and file it all in one location for easy access. This would include, but is not limited to:
- Bank statements and account numbers
- Wills and end-of-life planning documents
- Insurance policies
- Mortgage documents
- Car titles and car loan information
- Passwords and codes needed to access any online banking or bill paying
Become Legal Guardian of Their Assets
Surprisingly, 49% of those providing financial caregiving don’t have the legal authorization to do so. This will become a significant issue if your parent becomes incapacitated and cannot make sound financial decisions. With a living trust or a durable power of attorney document, you will be legally allowed to make financial decisions on their behalf, especially if they become unable to do so.
Include Family Members
With power of attorney or as trustee, be transparent about your parents’ financial situation with siblings and any other involved family members. Doing so will take any scrutiny off of you as the legal guardian and should curtail family arguments that can arise when money comes into play. It may be a good idea to hold regular family meetings and keep a record of them for future reference.
Enlist Professional Help
If it all becomes too much to handle or your parents are hesitant to cooperate, consider hiring a financial advisor, attorney, or money manager. A professional can assist with sorting through documents and statements and can help you put systems into place. Be aware of the differences between a fee-only and a fee-based professional before you choose one that is right for your family.
Above all, make sure that you and your parents are on the same page throughout this process. If it’s not working out, don’t be ashamed to pass the responsibility onto another trusted family member. Your relationship with your parents should not suffer because of disagreements over money.