Checklist for Managing Your Elderly Parents' Finances

An estimated 42 million Americans are caring for someone over the age of 50, with most caring for a parent or parent-in-law, according to AARP. If you're part of this statistic, you’re likely helping parents out around the house, getting them to the doctor, making sure they’re taking medications or providing hands-on care.

You’re also likely assisting with money tasks, especially if your parents have Alzheimer’s disease or another type of dementia. All of these caregiving responsibilities are difficult, but managing aging parents’ finances can be especially challenging. Even small mistakes can be costly—for them and for you.

However, you don’t have to feel like you are in over your head. This checklist will guide you through the steps to take if you need to get involved with your aging parents’ finances.

Get the legal right to make financial transactions

First things first: You need the legal right to make financial transactions and decisions for your parents. Just because you might have your parents’ login credentials for their financial accounts doesn’t mean that you can legally access those accounts. You need to be a joint account owner, trustee, their agent under power of attorney, or their court-appointed conservator or guardian.

• Joint account owner: A joint account is an account with two (or more) owners instead of one. All owners have access to the account and can make transactions without the other’s permission. Although it’s a simple solution, being a joint account owner isn’t the best option for managing your parents’ finances. For starters, it only gives you legal access to the account which you are the owner of—not broad financial powers. Plus, there are several cons to joint account ownership, including potential tax and inheritance issues.
• Trustee: If your parents have a living trust and have named you trustee, you can manage any accounts and property in the trust. However, you won’t have the right handle transactions for any accounts that aren’t in the trust, such as their utilities, phone or other service accounts—unless you’ve also been named their power of attorney.
• Power of attorney: Being named your parents’ agent under power of attorney is ideal. In most cases, a general durable power of attorney is the best option for financial caregivers because it goes into effect immediately and remains in effect if your parents become incapacitated. As your parents’ power of attorney, not only will you be allowed to access their financial accounts, but also you can make financial and legal decisions for them. For a power of attorney document to be valid, it must be drafted and signed by your parents while they still are mentally competent.
• Court-appointed conservator or guardian: If your parents are no longer competent or are incapacitated and haven’t named you POA, you’ll have to petition the court to be named their conservator or guardian. This process can take several months and cost thousands of dollars. Plus, you’ll be required to file annual financial reports with the court detailing how you managed your parents’ finances.

Notify financial institutions of your power of attorney status

Notify your parents’ financial institutions of your power of attorney status (or conservator status). You will need to show the actual power of attorney document or provide a copy of it before financial institutions will allow you to act on your loved ones’ behalf. Do not give financial institutions the original copy of the POA document to keep.

Be aware that some financial institutions can be reluctant to accept POA documents. They might claim that the document is too old if it was drafted several years ago or that they have their own documents that must be signed. However, financial institutions are required in most states to accept power of attorney documents that are valid (signed and notarized).

To limit pushback from financial institutions, go with your parents to submit the POA document for approval. This will help reassure financial institutions that your parents have entrusted you to be their agent.

If your parents are incapacitated, contact their financial institutions to find out what their requirements are for accepting a POA document. Make an appointment to bring in documents for review, including the POA document, your ID and any medical records indicating that your parents shouldn’t be making financial decisions.

Notify government agencies of your POA status

Some government agencies will require you to fill out their own forms to manage your parents’ government benefits.

• Medicare has a form to appoint an authorized representative. You can fill it out if your parents are unable to and you are their power of attorney or conservator.
• You must apply with the Social Security Administration to become your parents’ representative payee to manage benefits for them. If your parents don’t already have a “my Social Security” account, you can create one at SSA.gov to access the representative payee portal.
• Contact the Veterans Affairs Department to be appointed a fiduciary to oversee management of your parents’ veterans benefits.

Gather details about your parents’ finances

Gather as much information from your parents about their finances as possible. However, you might need to play detective if they are experiencing memory loss or are incapacitated. The best sources of information include their tax returns, their mail, their wallets, bank and credit card statements or their checkbooks.

• Take inventory of your parents’ sources of income, investments, debts, real estate holdings, property such as cars and boats, and personal items of value such as jewelry. Locate deeds, property titles, lockbox keys, and insurance cards and policies.
• Create a list of your parents’ personal information, including their birthdays, Social Security numbers, driver’s license numbers, veterans ID, Medicare or Medicaid numbers, and other personally identifying information. You’ll be asked for this information regularly, so it helps to have it all in one place.
• Create a list of financial accounts, account numbers, usernames and passwords, and contact information for your parents’ financial institutions. Store this list someplace safe so this sensitive information doesn’t fall into the wrong hands.
• Create a list of bills that must be paid monthly, quarterly and annually. Include bill amounts (or estimates), account numbers, account usernames and passwords, and contact information for service providers.
• Locate estate planning documents, including your parents’ financial and health care power of attorney documents, advance directives, and wills or trusts. One way to keep these documents—as well as insurance policies, property titles, deeds, passwords and other financial paperwork—organized is to use a digital vault such as the one included with the Carefull financial safety service. You can scan, upload and securely store documents to keep them accessible when you need them.

Streamline your parents’ finances

Make the job of managing your parents’ finances easier by taking the following steps.

• Consolidate accounts and credit cards. Help your parents shift cash into just one checking account and one savings account. Credit card balances can be transferred to one card or paid off with a personal loan. Retirement and investment accounts also can be consolidated. Before closing any accounts, though, check for any recurring payments or deposits into those accounts and switch them to the accounts that will remain open.
• Set up automatic bill payments for monthly bills such as mortgage payments or rent, car loans, cable TV and phone service. Have electronic statements emailed to you, and opt your parents out of paper statements so they don’t get confused and send in payments. Also, contact your parents’ financial institutions, pension providers and insurers to ensure that they send account statements to you.
• Eliminate duplicate or unused services and subscriptions. Review your parent’s bank and credit card statements to identify services, subscriptions and memberships that they don’t need or use.
• Audit your parents’ wallets to limit the damage if their wallets are lost or stolen. Remove Social Security cards and Medicare cards, and limit credit and debit cards to just one each.
• Limit spending, if necessary, to protect your parents from endangering their financial well-being. You can do this by replacing their debit and credit cards with a prepaid credit card or by giving them cash for spending money.
• Don’t co-mingle your parents’ finances with yours, even if you are a joint account owner. Mixing your money with theirs might impact their eligibility for government benefits, such as Medicaid, or raise suspicions of other family members.

Monitor and protect their finances

You need to keep a watchful eye on your parents’ finances to protect them from scams, fraud and money mistakes. Technology can make this easier.

• Create a “my Social Security” account. Help your parents log onto SSA.gov to create a my Social Security account to manage and keep track of their benefits. For more, see Why You Need a My Social Security Account.
• Get account alerts. Most banks and credit card companies offer the option to receive transaction alerts. However, the types of transactions they monitor are limited. You can get much more comprehensive monitoring through a service such as Carefull, which reviews bank, credit card and investment accounts 24/7 for more than 40 different types of activity ranging from larger-than-usual withdrawals to unwanted charitable donations to gift card purchases (a common request by scammers).
• Sign up for credit and identity monitoring. The Carefull service includes credit monitoring, which will constantly monitor your parents’ credit reports and alert you to any changes, such as new accounts that are opened. Carefull also monitors the internet and dark web to detect misuse of personal information and provides up to $1 million in identity theft insurance to cover the cost of expenses related to resolving identity theft.
• Freeze their credit reports to prevent new accounts from being opened in their names if they become victims of identity theft. Freezing their credit also can prevent them from opening new lines of credit, which can be a smart move if they have dementia and are at risk of signing up for too many credit cards. It’s free, fast and easy to place security freezes on credit reports at each of the three credit bureaus—Equifax, Experian and TransUnion—by visiting their websites.
• Monitor your parents’ mail for bills that can’t be set up for autopay and for solicitations that need to be tossed. If you don’t live in the same city, take advantage of the U.S. Postal Service’s informed delivery to get emails with images of mail that is arriving. There isn’t an option as their power of attorney for you to enroll your parents. But they could enroll and have email alerts sent to you so you can review their mail virtually.
• Block spam calls by installing their wireless provider’s spam blocking app on their mobile phones and by dialing *77 on their landline to turn on Anonymous Call Rejection. Reduce solicitations your parents get by helping them register at DMAchoice.org to opt out of direct mail.

Keep good records

Depending on your legal status, you might be required to keep records of how you manage your parents’ finances. For example, you will have to file annual reports detailing financial transactions you made for your parents if you are their court-appointed conservator or Social Security representative payee.

Even if you’re not required to file reports, it’s still a good idea to keep records in case other family members want to be assured that your parents’ finances are being managed properly.

• Keep a detailed list of purchases or payments you make for your parents’ with their money, and hang onto any receipts you receive. Digital platforms such as Carefull can also help you track your loved ones’ income and expenses.
• Avoid paying with cash for their expenses. If you need to make ATM withdrawals to provide your parents with cash as a spending allowance, keep notes of the amounts withdrawn and reasons for the withdrawals.
• Create a filing system to store your parents’ financial statements and records. You can scan and store most documents on your computer or on the cloud. However, hang onto any physical forms, such as 1099s, that will be needed to file tax returns.
• Track your spending. If you’re providing monetary support, keep tabs on how much you’re spending on your parents’ care. You might be able to claim a parent as a dependent on your tax return if your parent has limited income and you provided more than half of his or her support during the year. Tracking your spending also could come in handy if you’ve agreed to share the cost of care for a parent with your siblings or other family members.
• Record payments you receive from your parents if they are paying you to be a caregiver. Have a written agreement stating the scope of assistance you’re providing and the hourly rate you’re being paid. This will assure other family members that you’re not simply taking money from your parents and will help you get paid as a caregiver by Medicaid if your parents qualify for its long-term care benefits.

Plan ahead

You might eventually have to take complete control of your parents’ finances as their health declines. Being aware of the additional responsibilities you’ll have to take on, ways to stretch their financial resources and what sort of professional support is available can help you plan ahead.

• File tax returns. You might have to fill out and sign tax returns for parents if they are no longer competent. Notify the IRS of your power of attorney status by filling out Form 2848 and sending in a copy of the POA document along with the federal tax return. Your parents’ state might also have its own form you need to complete.
• Manage Medicare benefits. Medicare has a form your parents can fill out to appoint you as their representative to manage their benefits for them, or you can complete it if you are their power of attorney. Because costs and coverage associated with Medicare health and drug plans can change annually, review the “Medicare & You” handbook your parents receive to decide whether to make changes to their coverage during open enrollment October 15 through December 7.
• Look into government benefits that your parents might qualify for if they are struggling financially. Use the federal government’s Benefit Finder to see if they are eligible for any financial benefits, housing assistance or healthcare assistance. The U.S. Administration on Aging has an Eldercare Locator that helps connect older adults with local support services.
• Assess long-term care options and ways to pay. Review options for long-term care—including care at home, an assisted living facility or nursing home—before your parents need round-the-clock care. Be aware that Medicare doesn't cover long-term care costs. So review any long-term care insurance or a life insurance policy with a long-term care benefit they might have to understand when coverage kicks in and the extent of coverage.  Or work with an elder law attorney to find if they can qualify for Medicaid long-term care benefits. ‍
• Prevent exploitation of your parents by vetting any caregivers carefully, removing cash, checks, credit cards, valuables and important financial documents from the house, using technology for remote monitoring, and staying actively involved in your parents’ care with frequent visits and phone calls.
• Get professional help. An aging life care professional can help manage care for your parents, assist with financial matters and connect you with local assistance programs. You could hire a daily money manager to handle bill payments, negotiate with creditors and other daily financial tasks for your parents. And a fee-only financial planner can review your parents’ assets and create a plan to stretch those assets as far as possible to cover care needs.

A final note

If you have to get involved with your parents’ finances, it’s best to ease your way in to increase the chances that they will accept your help. And you’ll have more luck getting them to cooperate by focusing on the benefits of what you’re trying to do (such as helping them avoid late fees by automating bill payments) rather than pointing out why they’re no longer capable of managing certain financial tasks on their own.