Managing your folks’ money: 5 steps
Even if you think you’re well prepared to take over an aging parent’s finances you’d better read this guide.
(Money Magazine) — Ever since Yvette Mesquita took over her father’s finances, she’s felt as if she’s had two jobs.
Two years ago, Bill Mesquita’s longtime companion died. Overcome with grief, he wasn’t able to keep up with day-to-day tasks like bill paying. Before Yvette and her two sisters realized what was happening, their dad had racked up $30,000 in credit-card debt.
Mesquita, a 43-year-old parks employee in Tolleson, Ariz., lives about 90 minutes from her now 71-year-old father, so the bulk of the financial management fell to her.
She convinced her dad to cut up his credit cards and refinance his mortgage. Then she took over the bills and budgeting so she could make sure that he kept his expenses within the $40,000 or so he earns from Social Security and a pension.
Her quick action helped avert a disaster. But the process hasn’t been easy. “The red tape can get overwhelming,” she says.
When Mesquita tried to open a joint bank account with her father, for example, she figured the durable power of attorney he’d signed would be sufficient. It wasn’t. The bank had its own forms that both she and her dad had to fill out before Mesquita could act on his behalf.
Her dad was able to come into the bank to do the paperwork, but the incident worried Mesquita. “I thought I had everything taken care of,” she recalls. “What if my dad had been in the hospital? I’m wondering what else the power of attorney won’t work for.”
More than 34 million people help care for a parent or elderly friend or relative, according to the AARP Public Policy Institute. Whether it’s paying the monthly bills, appealing a denied insurance claim or overseeing an investment portfolio, money management is often the first role adult children take on when they begin assisting an aging parent. Yet few families are adequately prepared.
Without advance planning, just finding files can be a massive undertaking. Often by the time you realize you need to intervene, memory loss or illness are a problem. Your parent may have misplaced statements, forgotten about accounts or, worse, let payments lapse. Even in the best of circumstances, glitches like an insufficient power of attorney are common.
To avoid adding logistical headaches to what’s already a fraught transition for both parents and children, every family should follow these five steps long before help is needed.