Senior Finances-Do Your Parents Need Your Assistance?

Knowing when it's time to step in and assist your parents with handling their financial matters is a delicate process. Many families it difficult and awkward to approach the subject with their parents and tend to avoid discussing it until a crisis arises. There are steps you can take to put a financial plan in place before it becomes necessary. It's best to consult an attorney to ensure you are complying with your state laws, because laws regarding power of attorney vary from state to state.

Start the process by having a conversation with your parents. As them what their wishes are regarding their finances and ask who should manage them. If there is a will in place, it should be reviewed and updated if necessary. (And of course if there is no will, now is the time!). Your parents can consult with an attorney for help to determine who should be in charge of their finances in the event it becomes necessary. A durable power of attorney can be designated. A durable power of attorney has the authority to manage your loved ones legal and financial matters in the event they become incapacitated.

If your loved on has already become incapable of managing their own finances and legal matters, it may be necessary to speak with an elder law attorney to establish a guardian that can act on behalf of your parents. This process tends to be much more complicated if initiated after your loved one has become incapacitated. The courts will want to safeguard against abuse of power in order to best protect your loved one. This is one of the strongest arguments for naming a durable power of attorney before your loved one is incapacitated.

Use the following guidelines to properly manage your parents' financial affairs:

• As a designated durable power of attorney, remember your role is to act in the best interest of the disabled person. Therefore, avoid using your loved one's funds for any of your own uses.
• You should keep your personal funds separate from those you manage for your loved one.
• You should maintain accurate records of all transactions you make on your loved one's behalf. Keep receipts, invoices and bank statements.
• Notify all financial institutions your loved one has accounts with, that you are authorized to act on their behalf. Give them a copy of your durable power of attorney to keep on file.
• To avoid the confusion of numerous accounts, consolidate your loved one's assets into as few accounts as possible.
• As durable power of attorney, you should always invest conservatively your loved one's funds. "Gifts" can only be made with your loved one's funds if it is specifically addressed in the power of attorney document.
• As power of attorney, the proper document signature should first include your loved one's name, followed by your signature, followed by "his or her power of attorney".

The best advice is to be prepared when dealing with your parents' finances. While awkward for many, having this conversation before it becomes an absolute necessity can give your parents' peace of mind that their wishes will be considered and that their finances will be properly managed..