If you’re helping an elderly friend or relative manage finances, here are a few suggestions to help avoid potential problems.
As people age, their lives can change. Some may experience reduced mental clarity while others may require family help due to physical limitations. Sometimes the death of a spouse who previously handled business affairs may place the survivor in a state of uncertainty or anxiety.
In circumstances like these, it may become necessary to help an elderly person manage personal finances. If you have assumed that responsibility for an aging loved one or friend, here are a few tips to help reduce the potential for problems.
1. Get a power of attorney form signed and recorded. A power of attorney allows someone, in this case the elderly person, to designate another person as his or her financial representative. An attorney will prepare the form, which then must be signed, witnessed, and notarized. This can be done at the attorney’s office, or at the bank where you have an account. Often the attorney keeps a copy, with the original going to the named representative and another notarized copy to the elderly relative.
The power of attorney allows a representative to buy and sell on the elderly person’s behalf, make financial decisions, manage bank accounts, and transact business. Talk with your relative to see if he or she is willing to enact a power of attorney, which will make your ability to help much easier.
2. Discuss with your family member the goals for existing accounts and future growth. If possible, get the person’s wishes in writing or videotape the person spelling out preferences. This will be a good security measure if the person becomes senile or if other family members try to intervene and impose their wishes over those of your relative.
3. Keep good records for at least seven years. Copies of everything from deposit slips to check registers and bank statements should be stored in a safe place, perhaps a safety deposit box at the bank where you hold accounts.
4. As your older relative is able, encourage quarterly or bi-annual visits with the bank holding personal accounts so the person can remain a participant in his or her business affairs. Not only will this reinforce personal dignity and involvement, it will help to build trust in your judgment and decisions.
5. If your family member becomes critically ill or senile, recruit the help of another trusted family member or an attorney to help you manage the business affairs and to preserve accountability. That way, no one can truly question your decisions or accuse you of mismanagement, since you have an authorized and objective third person checking things from time to time.
If at all possible, get your family members’ wishes in writing before they retire or need your help. When help is finally needed, prudent decisions will already be in place rather than anyone making hasty choices out of last-minute need.
Caring for a loved one’s finances is a privilege and a responsibility, as well as extra work. Take time to carefully think through this role before you agree to take it on.