Here are eight steps to taking on management of your parents’ finances.
Draft a Power of Attorney A power of attorney names you as an agent to act for your parent if he becomes incapacitated and unable to handle his own affairs. The document can be written to cover a wide range of events, from selling a single piece of property to handling all financial transactions.
Here are a few options that may apply to your situation:
These are just some of signs that your parents may be beginning to lose track of their finances:
A durable financial power of attorney is recommended, since it remains in effect even if the parent is incapacitated. An aging parent can add a “payable on death” provision to bank accounts, according to Legacy Assurance. This ensures their money will bypass probate and be paid directly to beneficiaries.
These laws, called filial responsibility laws, obligate adult children to provide necessities like food, clothing, housing, and medical attention for their indigent parents.
8 Things You Must Do to Protect Your Parents’ Assets
Many adult children wonder if they can be compensated for the countless hours that they spend caregiving for their aging parents. This is especially true with those family members who are caring for a loved one with Alzheimer’s or another form of dementia. The short answer to this question is yes, it is possible.
Twelve states ( Colorado, Kentucky, Maine, Minnesota, New Hampshire, New Jersey, North Dakota, Oregon, Texas, Utah, Vermont, and Wisconsin ) allow these state-funded programs to pay any relatives, including spouses, parents of minor children, and other legally responsible relatives.
Follow these strategies for taking control of your finances right now.
That person has a fiduciary duty to take care of the money. Fiduciary comes from the Latin word fidere, “to trust.” That’s because a fiduciary is the person you trust to hold and watch over your assets until it’s time for them to go to another designated person.
His advice for dealing with a controlling aging loved one:
Will bank accounts be frozen? You will need a tax release, death certificate, and Letters of Authority from probate court to have access to the account. A joint account with a surviving spouse will not be frozen and will remain fully and immediately available to the surviving spouse.
This can be done by meeting with an estate planning or elder law attorney, who will draft a power of attorney document. As your parent’s power of attorney, you could gain access to all of your parent’s financial accounts, not just the bank account.
As your parents age, it may seem like a good idea to add your name to all of their bank accounts. If you have a joint account with your mother, the state will consider the money in that account to be your mother’s sole asset, even though your name is also on the account.