Taking Over an Elderly Parent's Finances Legally

Your parents probably spent a large portion of their lives taking care of you. So it can feel awkward or even scary when the tables turn. But if an aging parent is struggling to manage their finances, you may need to step in and help.

Depending on the situation, they may just need a bit of assistance from you, or it might be necessary for you to fully take over their finances. This doesn’t have to be an exceptionally difficult process, however. Legally taking over your a parent's finances will involve a lot less time and stress if you approach it the right way and have knowledge on your side.

When To Take Over Your Parent's Finances

When it comes to helping your parents as they age, it’s best to be proactive.

“Ideally, you should speak with your parents regarding who will take over their finances long before any problem occurs,” said Lyle Solomon, principal attorney at Oak View Law Group, in an email to The Balance. “If you have the conversation early, you’ll know when to step in and what should be done when the time comes.”

But even if you haven’t had that discussion, it’s important to know when to intervene. Solomon said the following are some signs to watch out for:

• Unusual purchases: If a parent is buying items that don’t fit with their lifestyle or needs, or entering a number of sweepstakes or contests, that’s a sign you should consider taking over your parents’ finances soon. “These matters can get out of hand quickly, and seniors fall prey to scams often,” Solomon said.
• Mail that’s piling up: A backlog of mail could indicate that a parent is engaging in unusual spending or having financial difficulties.
• Frequent money complaints: If your parents tend to complain about their finances often, such as not having enough income or bills that are past due, consider intervening.
• Memory issues: Look out for signs that their memory isn’t what it used to be, particularly if it’s affecting their finances. For example, it could be a red flag if they can’t remember why they wrote a large check or whether they paid the mortgage.
• Physical decline: If you notice that your parent is struggling with daily life due to physical reasons such as poor vision or arthritis, they may require assistance, which can be expensive.

How To Take Control of Your Parent's Finances

If you decide it’s time to step in and help out one parent, or both, with their money, there are a few steps you should take.

Track Down Paperwork

The first step in taking over management of your parent’s finances is locating account statements, bills, and other paperwork that will help you get a grasp on the current situation.

Prepare an inventory of all your parent's bank accounts and loans, as well as any regular bills they incur. This will give you an idea of their liabilities and what resources are available to cover them. You might find that you need to contribute some funds to ensure everything remains in good standing.

Get Power of Attorney

Find out if your parent has a living trust or power of attorney. These documents designate people (other than your parent) who are legally allowed to handle their affairs, and you want to find out if they’ve designated you.

“You must present these legal documents to every financial institution you deal with,” Solomon said.

He recommended you add your name to your parent's checking account if you'll be managing their finances indefinitely. This can be arranged if you have financial power of attorney and the bank branch manager has reviewed it.

If your parent hasn't signed a power of attorney, doesn’t have a living trust, and they’ve become incapacitated (due to an illness, for example), Solomon said you’ll have to go to court to become their guardian in order to handle their finances. The court will also need to determine if you’re fit to handle your parent's finances. Solomon noted it’s not a particularly pleasant process, and it’s helpful to work with an elder-law attorney.

Document Everything

“You should keep track of everything you do for your parents,” Solomon said.

This will ensure there’s a paper trail for sensitive legal and financial issues. Plus, it will keep siblings and others in the loop about what’s going on, and show that you’re taking care of your parents' matters in a responsible manner.

Consider Hiring Help

Managing your own finances can be a lot of work in itself, so taking on the financial well-being of a parent can be stressful and complex. To avoid financial mistakes that may end up costing a lot, Solomon said you should consider hiring an attorney, financial planner, and/or a tax professional. “They can help you with the budgeting, and it would also reassure your siblings.”

The Challenges of Managing Your Parent's Finances

One of the biggest potential challenges of managing your parent's finances is getting them to share information with you, said Patrick Simasko, an elder-law attorney and financial advisor at Simasko Law in Mount Clemens, Michigan.

“Many parents are secretive, or think they have everything handled and don’t want their children involved,” he said in an email to The Balance.

Have a conversation with them to help them realize you’re doing this for their protection and safety. Ensure they understand you’re trying to help in the unfortunate event something happens to them.

Matters can also get complicated if their finances have already been mismanaged. You may have to do some damage control, which could require you to contribute financially. If you’re experiencing any challenges with your own financial situation, it might feel overwhelming. Speaking with a financial advisor can help; many offer free consultations, hourly billing, and even virtual meetings, so you don’t have to worry about committing to costly or extensive assistance.

How Siblings Can Prepare To Handle the Process

Solomon said that all siblings or other heirs who will be impacted by your decisions should be informed if you are in control of your parents’ money. Being transparent with your siblings is key to avoiding conflict.

“You should call family meetings to inform any involved siblings or others about the financial situation of your aging parents, their need for care, the expense of that care, and the management choices you are making,” Solomon said.

However, you don’t have to handle everything on your own. If all siblings get along, Simasko said that each one of you can take separate jobs when it comes to handling your parents’ finances. “One sibling should be in charge, and the others should help alleviate the stress of the job,” he said. Again, involving an attorney can help eliminate issues and allow all siblings to understand their roles, as well as ask any questions they may have.

If you’re an only child, you’ll probably need to rely more heavily on professional guidance. However, it doesn’t have to be expensive. An aging life care professional can help oversee different aspects of your parents' care and help you find free or low-cost community resources.

The Bottom Line

Taking over a parent's finances—or even knowing the right time to do so—isn’t easy. However, getting on the same page with your parent and siblings will make the process go more smoothly. Have conversations with your family about the best way to help as early as possible.

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