Things You Need to Know About Handling Your Aging Loved One’s Finances

Sometimes a loved one starts having trouble managing her money because of confusion, cognitive decline, Alzheimer’s disease, or some other form of dementia. When that happens, you might find yourself having to serve as her money manager. Here are some things you need to know about handling your aging loved one’s finances.

Changes to Make Now

Your loved one must be legally competent to takes steps like adding a trusted friend or relative to a bank account or creating a power of attorney the money manager can use to handle her financial matters. Once your aging loved one becomes incapacitated, she will not be able to hand the reins over to someone else.

At that point, the only option is to go to court and obtain a guardianship or conservatorship. These processes can take months or longer, and they often cost thousands of dollars in legal fees for the lawyer who files and handles the guardianship, court costs, and payment to the person the court appoints to represent your loved one.

People often challenge changes that a person makes when in the early stages of Alzheimer’s or after a certain age. The way to counter this situation is to get a letter from your loved one’s doctor at the same time your relative signed the power of attorney or made the joint account. The doctor’s letter should say your relative was of sound mind at that time.

How to Avoid Elder Financial Abuse

Sadly, the vast majority of people who steal from older adults are the people they trust the most. Family members, friends, clergy, and financial professionals commit the lion’s share of elder financial abuse. To prevent this outcome for your loved one, you have two options:

• Have two people in charge of your loved one’s finances instead of only one. The two people can alternate the responsibility monthly or quarterly. This arrangement provides automatic oversight of each person’s actions. You could, for example, have a close relative and a dear friend serve as the two money managers.
• Use a money management service. These companies can take care of things like paying the bills and balancing the checkbook for your aging relative. You should have a relative or friend go over the reports from the company every month, to check for fraud on the part of the company. Your local National Association of Area Agencies on Aging can provide names of money management programs in your area.

When a money manager starts handling your loved one’s finances, she should prevent identity theft and fraud by canceling and shredding your relative’s debit cards and credit cards. She should also close the accounts at PayPal and other online shopping services.

Keep All Transactions Above Suspicion

Because incapacitated people are so vulnerable to theft and fraud, the people who manage your loved one’s money and other assets should take precautionary measures to make it clear they are acting in your relative’s best interests. Always write the reason for the payment on the memo line of the check. Never co-mingle funds.

Do not borrow from the account. Do not use your loved one’s assets for purchases that benefit anyone other than your relative. Do not use his assets for your own benefit, like driving his car to work.

Every state has different regulations, and this article covers the general law. You should talk to an elder law attorney near you.

References:

AARP. “Managing a Loved One’s Money.” (accessed July 11, 2019) https://www.aarp.org/caregiving/financial-legal/info-2017/managing-someone-elses-money.html?intcmp=AE-CAR-LEG-EOA1