Managing Finances for an Older Adult

As we age, financial independence becomes harder to maintain. If you’re the primary caregiver for an older adult, you know exactly what I mean. It starts out small: standing for long periods is tough on her, so you settle her in the waiting room and check her in at the doctor’s office, handing over her insurance card and copay. He needs you to pick up a few things from the store, so he gives you his ATM PIN and asks you to take some money out. Her handwriting becomes shaky, so you start writing her checks, passing them back so she can sign each one.

These tasks might be minor, but if you’re handling them regularly, it’s time to take stock. Managing finances for a senior isn’t that different from interacting with medical professionals on their behalf, but it can involve some sticky legal issues. The best thing you can do to protect yourself and your loved ones is to address the responsibility directly. Making transparent, intentional plans can save you and your loved ones a lot of headaches.

Share Responsibility

In this series for caregivers, I’ve often discussed the need to define who will be responsible for what tasks; financial management is no different. Families often choose one relative to become a joint account holder, which makes writing checks, making withdrawals, and negotiating with creditors and lenders easier. It’s best to formalize this relationship to ensure that all legal protections are in place. You can get help from a lawyer to determine what role or roles are right for your family members.

• Trustee: Controls assets that have been transferred to a trust on behalf of another person.
• Power of attorney: Has the power to make decisions about a person’s money or property.
• Court-appointed guardian: Makes financial decisions for someone who cannot make those decisions for themselves.
• Government fiduciaries: Manages another person’s income benefits, like Social Security or Veterans Affairs (VA) benefit checks.

Plan for the Future

Even if your loved one can manage their finances right now, they may need more help in the future. When setting up legal protections, seek options that allow for flexibility now and greater protection in the future. An arrangement called a “revocable living trust,” for instance, gives seniors the right to change their minds about how their finances will be handled, but ensures that when they need caregivers to take over, their trustees will have the access and decision-making power they need.

Perhaps your loved one is able to pay their monthly bills or make decisions about investments now, but if you sit with them while they do their own financial management tasks, you’ll have a better idea of what needs to be done if they become incapacitated.

Keep Good Records

Money can be a sore spot for mistrust and conflict, and there are serious legal implications for anyone found to be mishandling the finances of a person in their care. For this reason, it’s always valuable to keep good records.

If you’re making purchases on behalf of a senior, write down what they’ve requested, what it costs, and when you bought it. Keep receipts. Make sure to write complete memos on checks so they can be identified easily. Keep your own spending separate from theirs, and do not borrow from their funds and then plan to pay them back — this can get confusing very fast. Be sure to communicate openly and transparently with any other caregivers about how money is being allocated — the more transparency, the better.

Avoid Financial Exploitation and Elder Fraud

Even if you’re not a primary financial manager for the older adults in your life, you can still help keep their finances safe. Be observant and explain that you want to ensure that your loved one’s financial management is handled honestly. Watch out for some of the common signs of financial exploitation or elder fraud/financial abuse, including:

• Major unexpected investments, changes to assets, or withdrawals
• Missing property or funds
• Use of assets or possessions without permission

Managing a loved one’s finances doesn’t have to be stressful, but like most caregiving tasks, it’s a big responsibility. Don’t be afraid to ask questions and seek the advice of a skilled professional — you’ll be glad you did.