It’s a funny thing when you realise that your parents are old. It makes you reflect on their lives and is probably when the responsibility of care shifts to you looking after them.
We’re talking about making sure that they’re taken care of and in the best position to enjoy their golden years. Of course a big part of that is ensuring their finances are in order.
Having gone through the process with both of our parents, looking after an elderly parent’s finances and how to approach them can be a sensitive and tricky area.
Have the talk
The first step is to discuss the issue with your parents as early as possible. It can be an uncomfortable situation as no parent wants to face the problems of old age or feel as though their children are putting them out to pasture.
So don’t phone your parents out of the blue and fire off a list of questions about their money. Sit down with them, show respect and tell them you have some questions about their financial wellbeing… and to make sure they’re okay.
Emphasise that your enquiries are not being made by a gold digging child, but by a family concerned about caring for them in the best possible way if a disaster occurs.
The next step is to get all the key information together and details of anyone currently managing their affairs.
If your parents are elderly and starting to forget information or lose track of things, ask to meet their bank manager but make sure they make the introductions.
During the meeting ask to sign an authorisation which allows the banker to talk to you about their accounts. This means the bank will be comfortable in keeping you up-to-date and can provide an early warning system if irregularities start to appear.
While you’re looking into your parent’s finances, check they’re receiving the maximum government benefits they qualify for. Are they getting the age pension? Are they eligible for benefits such as rent assistance and allowances for things like pharmaceuticals, utilities and phone bills?
Also find out if your parents have done an official will and where it’s located. Explain to them you don’t want to know what’s in it, just check that they’ve done one. I’m sure they would much rather decide what happens to their estate than the government.
If they haven’t done a will, or updated it in a number of years, put them in touch with a lawyer or get them a do-it-yourself Will Kit.
Appoint a power of attorney
Once parents have suffered a stroke or moved into the advanced stages of Alzheimer’s disease, they may not be able to give you legal authority to act on their behalf.
So it is critical a power of attorney is arranged to enable a friend, relative or solicitor to take control of their finances when needed. It is not a pleasant thought, but one which must not be neglected.
A power of attorney can be limited to a designated piece of real estate or it can cover all financial transactions. Your parents don’t have to be incapacitated to need a power of attorney either, they may just need someone to look after their affairs if they go away for an extended period.
Warn them off scams
Elderly parents can be too trusting and confused by technology, so your role as their de facto IT expert is to remind them to never pass bank details or passwords to anyone, beware of cyber crooks masquerading as bankers and not to do business with anyone they don’t know.
While it’s not an easy process to manage an elderly parent’s affairs, it is your responsibility to ensure they’re looked after, so approach it with respect and don’t leave it too late.