Trending
Written by: Cameron Huddleston | Carefull
Protecting your aging parents’ finances might seem like an uphill battle. They face outside threats from scammers, identity thieves and other bad actors. They also can make financial missteps on their own, especially if there is cognitive decline. Added to these risks can be a reluctance on your parents’ part to let you get involved.
However, you shouldn’t let potential challenges prevent you from trying to help. With the right approach, you and your parents can work together to safeguard their financial well-being as they age. Following these steps can help.
Step 1: Have family money talks sooner rather than later
It’s important to start talking with your parents about their finances before they need care or help with money matters. You don’t want to wait for an emergency because it will be much more difficult to have a calm, rational conversation at that point. Plus, by talking sooner rather than later, you can ensure your parents have essential legal documents and a plan in place to deal with emergencies when they arise.
These resources can help you have productive family money talks:
- A Checklist for Talking to Your Parents About Their Finances
- 5 Ways to Get Reluctant Parents to Talk About Their Finances
- How to Speak So Your Parents Will Listen
Step 2: Make sure your parents have legal protections in place
Your parents need to have certain legal documents to put protections in place for their finances and provide a roadmap of their preferences. Highlight to them that meeting with an elder law or estate planning attorney to draft these documents will give them control over end-of-life issues and make it easier for their loved ones to know what they want in a time of crisis.
Your parents need to have the following documents that put their wishes in writing:
- A will or trust to specify who gets their assets when they die. If they die without a will, their state’s intestacy laws will determine how their property is distributed—and it might not go to the people they want to receive it.
- A power of attorney to name one or more people they trust to make financial decisions for them if they cannot.
- An advance healthcare directive to spell out in advance what sort of end-of-life medical care they would or would not want. They also need to name a healthcare power of attorney, surrogate or proxy to make medical decisions for them if they cannot.
Naming trusted contacts for financial accounts also can add a layer of protection. A trusted contact is someone their financial institutions and financial advisors can reach out to if they are concerned about activity on your parents’ accounts and can’t reach them.
Step 3: Warn parents about scams and fraud
Adults 60 and over lost an estimated $61.5 billion to fraud and scams in 2023, according to the Federal Trade Commission. One of the best ways to reduce the risk that your parents will become victims is by raising their awareness about the latest schemes and tactics scammers use. Research by the Financial Industry Regulatory Authority shows that people who have heard about a particular scam are 80% less likely to engage with it, and if they do engage, they are 40% less likely to fall victim.
Share these resources with your parents:
Step 4: Stay alert to warning signs they need help
Taking the steps above will give you a solid foundation to build upon if you have to get more involved with your parents’ financial lives as they age. Be aware, though, that Mom and Dad might not reach out to you for assistance.
That means you should keep an eye out for these signs that they need help with their finances:
- 6 Signs Your Parents Need Help With Their Finances
- Financial Signs of Alzheimer’s Disease and Dementia
- Signs Your Parents Are Victims of Scams or Fraud
Step 5: Be a second set of eyes on their finances
If your parents are willing to let you play a more active role in protecting their finances or need help because of cognitive decline, encourage them to let you be a second set of eyes on their finances. This will allow you to spot small mistakes before they become big problems—such as late and missed bill payments, which can be an early sign of dementia. And it will allow you to spot signs of fraud and quickly intervene.
- How to Monitor Your Parents’ Financial Accounts
- Should I Open a Joint Bank Account with My Elderly Parent?
- Protect Your Aging Parents by Auditing Their Wallets
A service such as Carefull provides a secure way to monitor your parents’ finances. It provides 24/7 monitoring of financial accounts, credit and identity for money mistakes, signs of fraud and misuse of personal information. Your parents can name you as a trusted contact to give you view-only access to accounts being monitored and alert you when Carefull spots unusual transactions. Or, if you’re already helping manage their finances, you can create a Carefull account for your parents.
Related: How to Shatter the Barriers Holding Back Your Growth