A Practical Guide to Managing Aging Parents’ Finances

Caring for aging parents comes with many responsibilities, and managing their finances can feel overwhelming. The key is to approach it step by step with clear communication and thoughtful planning. This guide will help you navigate the essential financial tasks, ensuring your loved ones’ financial well-being while giving you peace of mind.

Start with a Financial Overview

Before making any financial decisions, get a clear picture of your parents’ current financial situation.

• Gather essential documents – Collect details on bank accounts, investments, retirement funds, pensions, Social Security benefits, and insurance policies.
• Review financial records – Tax returns, bank statements, bills, and expense records can offer a snapshot of income, expenses, and assets.
• Locate important paperwork – Ensure wills, trusts, property deeds, vehicle titles, insurance policies, and debt records are organized and accessible.
• Have open conversations – Talk with your parents about their financial goals, any concerns they may have, and their long-term plans.
• Let family members know where key documents are stored – In case of emergencies, trusted relatives should know how to access critical information.
• Retrieve missing tax information – If tax documents are missing, visit the IRS website to obtain tax transcripts.

Secure Legal & Financial Authority

Having the right legal documents in place can prevent financial headaches down the road.

• Set up a power of attorney (POA) – This allows a trusted person to manage financial decisions if your parents become unable to do so.
• Obtain a healthcare power of attorney – This ensures someone can make medical decisions when necessary.
• Review or establish a living will – This document outlines your parents’ wishes regarding life-sustaining treatments.
• Notify financial institutions – If you are a POA, work with banks and other institutions to ensure you have the proper level of access to manage accounts effectively.
• Anticipate pushback from financial institutions – Banks may be hesitant to accept a POA document without verification. To prevent issues, accompany your parents when submitting the POA paperwork.
• Schedule regular reviews – Financial and legal documents should be updated periodically to reflect any changes in circumstances.

Simplify Financial Management

Organizing finances can make it easier for you and your parents to track expenses and avoid unnecessary stress.

• Consolidate financial accounts – Reducing the number of bank accounts and credit cards can simplify financial tracking and reduce fees.
• Set up online banking and automatic payments – This helps ensure bills are paid on time and prevents missed payments.
• Sign up for account alerts – Many banks offer notifications for unusual transactions to help prevent fraud.
• Create a financial checklist – Keep an updated list of all accounts, bills, payment due dates, and any outstanding loans.

Plan for Taxes, Debt & Asset Management

• Keep tax returns for at least three years – If your parents have special claims, such as deductions for medical expenses, they may need to keep them for up to seven years.
• Retrieve missing tax information – Visit the IRS website to request tax transcripts if needed.
• Organize property deeds and vehicle titles – Ensure quick access for potential property sales or transfers.
• Track outstanding debts and loans – Maintaining a record of debts ensures payments are made on time and cancellations are handled appropriately after death.
• Designate beneficiaries on financial accounts – This simplifies the asset transfer process and ensures that assets go to the intended recipients. Required information includes the beneficiary’s full name, date of birth, Social Security number, and contact details.

Protect Against Fraud & Identity Theft

Seniors are often targeted by financial scams, so taking precautions is essential.

• Monitor accounts regularly – Reviewing bank statements and credit reports can catch unauthorized transactions early.
• Use financial management apps – These tools can provide alerts for unusual account activity.
• Consider a credit freeze if needed – This prevents unauthorized accounts from being opened in your parents’ names.
• Enhance online privacy settings – Adjust social media and online accounts to limit personal information exposure.

Plan for Long-Term Care & Future Expenses

Thinking ahead about healthcare and long-term care needs can help avoid financial strain later.

• Review healthcare and long-term care insurance – Understand coverage details, including waiting periods, service limits, and exclusions, to prevent unexpected costs.
• Explore care options – Choices include in-home care, assisted living, nursing homes, and adult day care centers. Understanding these options now can ease decision-making later.
• Evaluate in-home care services – These often include medication management, assistance with daily activities, and personal care, helping seniors maintain independence.
• Create a caregiving plan – Assign responsibilities among family members, detail schedules, and discuss backup plans for emergencies.

Secure & Share Important Documents

Ensuring financial and legal documents are accessible will make managing your parents’ affairs much easier.

• Use secure storage solutions – Consider cloud storage, a locked filing cabinet, or a fireproof safe for important records.
• Grant access to trusted family members – Share copies of key documents with those who may need them in an emergency.
• Maintain updated records – Regularly review and organize financial information, including investment accounts, stock certificates, and pension documents, to ensure everything remains current and accessible.

By taking these steps, you can help your aging parents maintain financial stability while ensuring their wishes are honored. The key is to start early, stay organized, and have ongoing conversations with them and other family members. Managing finances for aging parents may seem daunting, but with the right approach, you’ll have a plan that works for everyone. We’re here to help. For more information on these financial planning strategies for aging parents and assistance creating a personalized approach for your family’s needs, contact Donna Kline at 866-536-5776, or email her at dkline@hbkswealth.com

Important Disclosures

The information and examples included in this document are for general, educational, and informational purposes only. It does not contain any financial or investment advice and does not address any individual facts and circumstances. As such, it cannot be relied on as providing any financial or investment advice. If you would like financial or investment advice regarding your specific facts and circumstances, please contact a qualified financial advisor.

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The historical and current information as to rules, laws, guidelines, or benefits contained in this document is a summary of information obtained from or prepared by other sources. It has not been independently verified but was obtained from sources believed to be reliable. HBKS® Wealth Advisors does not guarantee the accuracy of this information and does not assume liability for any errors in information obtained from or prepared by these other sources.

HBKS® Wealth Advisors is not a legal or accounting firm, and does not render legal, accounting or tax advice. You should contact an attorney or CPA if you wish to receive legal, accounting or tax advice.