Four things to know about managing a loved one’s finances

Follow these steps to help prepare yourself for managing an elderly parent’s or relative’s finances.

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Taking over as the caregiver for a loved one can be stressful for many different reasons, and it comes with a lot of unanswered questions. When should I take over? What needs to be taken care of? What would make them happy? However, as you begin planning to take over medical or life decisions for your loved one, have you also considered what to do with their finances?

While this can be a difficult topic to broach, it’s important. You have to be open and honest with family members and tackle the subject head on. At some point, many of us will be in charge of our parents’ or elderly relatives’ caregiving and finances. We should be preparing our strategies now, so we’re ready when it happens.

1. When is it time to help?

Have you been considering taking over as a caregiver for a loved one, but you’re not sure if they’re ready? There are a few simple things you can do to determine if it’s time. When you visit, check for unopened mail or undeposited cheques lying around. These both become very common. This could be a sign that they are no longer able to go to the bank or may not understand why they should. Are everyday activities becoming difficult for them?

If they start mentioning that they don’t have any money or are asking for money, this might be a good time to start these conversations. It may be a daunting task at first, but it’s important.

2. How to get the conversation started

No matter when these discussions happen, they’re going to be difficult. But avoiding them altogether can lead to major problems down the road for you and your loved one. Start by coming up with a strategy; don’t go into this conversation without a plan. You don’t want to upset your loved one or make them uncomfortable.

For many of us, discussing money is a very private issue. Reassure your loved one that this isn’t about taking over their finances, it’s to help set them up for future success.

Think about who you want to be included in this conversation. Other family members? Any friends? It might be beneficial to have an outside perspective to help ease any tension or give any pieces of professional advice. If you can get help from a financial advisor or an attorney who can lead you in the right direction, that is a great start.

3. Where to begin?

After you have these conversations, it’s now time to take a closer look at your aging loved one’s financial situation. This includes annual income, credit card debt and how much they receive in government benefits.

Make sure you understand their monthly expenses; how much money is coming in and how much is going out. How are they paying their bills? Are they automatic? Do they pay them online? Or are they using paper cheques?

They might have a life insurance policy that you don’t know about, and you don’t want them to lose those benefits because it stops being funded. Gathering all these documents and putting them somewhere secure is key.

4. Important questions to ask

Does your loved one have an estate plan? If not, they need one. Many people think they must be wealthy to have one, but that’s not the case. Whether they’re a multimillionaire or they have only a few dollars in the bank, they need an estate plan.

You’ll also want to have a health care power of attorney in place before it’s too late. This will ensure that someone is legally empowered to view medical records and decide on any treatments on their behalf.

This is a critical part of an overall financial plan. You don't want something to happen to a loved one and be unable to legally decide for them even though you know their wishes.

Assessing the financial needs of a loved one will be easier with a good plan. Working with a financial advisor can help identify what needs to be done for your loved one and help reduce your out-of-pocket costs as a caregiver.

This article was written by Tony Drake, CFP® for Kiplinger and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to

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