Your parents worked hard for many years to attain the funds they have now. Retirement means that they are no longer receiving a regular paycheck and are living solely from their retirement savings and social security. With limited money, they need to be aware of their finances to ensure that they maintain the wealth they have established. Unfortunately, sometimes parents knowingly or unknowingly give away money they should not. As an adult child, you will want to know how you can stop your elderly parent from giving away money.
Prevent Scams
Scams are more prevalent than ever, and criminals put a lot of focus on older people. One of the best things you can do is to agree with your parents that they will not spend or give out money until they discuss it with you first. This will allow you to investigate the situation. Inform your parents about scams and remind them that they should not believe potential scammers.
Protect Savings
Talk to your parents about placing their funds in a savings account that they cannot easily access. Do not link it to the checking or debit account. That way, the money they saved will remain intact. In addition, consider adding a trusted person as an authorized contact, or use account alerts, and consult counsel before adding anyone as a joint owner. If you want the ability to monitor or act on the account, talk with an attorney about the right mechanism. Adding you as a joint owner, an authorized signer, or naming you under a power of attorney each have very different legal and tax consequences.
Safeguard Their Home
The family home is likely the largest single asset that your parents own. Yet there are some ways that your parents could be in danger of losing it. If the mortgage is not paid off, ensure that there is enough money every month to make the required payments. You also need to make certain that the taxes are paid and that the home remains in good repair. If your parents need funds, consider a reverse mortgage, but only after you review their finances. When considering a reverse mortgage, make sure the provider is legitimate. Keep in mind that a reverse mortgage can also affect Medicaid eligibility, so talk with an elder law attorney before moving forward.
Get Power of Attorney
As your parents age, they could be facing serious mental or physical illnesses that could make decision-making challenging. Your parents can give you power of attorney (POA). This means they can authorize you or another trusted person to handle the powers listed in the document. Although it means more work for you, it is best to become more involved in their finances during this vulnerable time. A POA will grant you the ability to handle a variety of matters, such as those dealing with property, finances, and investments, to name a few. A durable power of attorney can remain effective if the principal later becomes incapacitated. Important: a parent must have legal capacity to sign a POA. If cognitive decline has progressed too far, the family’s only option may be a court-supervised guardianship, which is more time-consuming and costly. That’s why having these conversations and signing the documents early matters.
You’ll also want to consider a separate Health Care Power of Attorney, which authorizes someone to make medical decisions if your parent becomes unable to communicate their wishes.
As your parents age, it is helpful to become more involved in their financial affairs. When you want to establish a power of attorney, we can help. Contact us today at Moen Sheehan Meyer, Ltd. at (608) 784-8310 or online to schedule a consultation.