09/29/2010 02:04 pm ET Updated Nov 17, 2011

When Elderly Parents Need Financial Guidance

A friend of mine recently realized his mother needed help managing her finances when he found her closets filled with oddball purchases like jalapeno jelly beans and Betty Boop bobblehead dolls. "It was pretty clear that telemarketers were taking advantage of her friendly nature to sell her junk she didn't want or need," he told me.

Fortunately, his mom welcomed assistance; but not all families are so lucky. Some parents are fiercely independent and fear relinquishing control over any aspect of their lives; others may be in over their heads and too embarrassed or overwhelmed to ask for help.

Postponing uncomfortable conversations with your parents about their finances may do them -- and you -- a serious disservice. The AARP Public Policy Institute estimates than more than 34 million Americans care for elderly relatives. Chances are, if you're helping your parents financially, that probably means your own retirement savings are suffering -- which could in turn place a burden on your kids when you retire.

It's never too soon to become familiar with your parents' financial, medical and legal records so you'll be able to step in and help out if needed. If possible, start those conversations while they're still in good health so you'll be able to spot any warning signals that something may be amiss.

Signs to watch for might include:
  • Unpaid bills, late payment notices or utility shut-off warnings.
  • Calls from creditors or collection agencies.
  • Indications they've had to choose between filling prescriptions and buying food, heating or other necessities.
  • Overabundant junk mail, unlikely magazine subscriptions or cheap prizes -- signs they may be targets of telemarketing or get-rich-quick schemes.
  • Seemingly unnecessary home improvements; or conversely, signs that they can't afford needed repairs.
  • Uncharacteristically lavish spending on vacations, new cars, etc.
If your parents initially are reluctant to share financial and legal information with you, bring in an impartial third party, such as an attorney, financial planner, social worker or trusted friend to guide the discussion. Long before your folks may require assistance, offer to help organize their finances. This will ultimately help you too if and when you need to step in. Set up and periodically update files containing:
  • Details of all major possessions and relevant paperwork (such as property deeds, car registration, jewelry, etc.)
  • Outstanding and recurring debts (mortgage, car loan, medical bills, utilities, etc.)
  • All income sources, including Social Security, pension, 401(k), IRA, investment accounts and savings.
  • Bank accounts, credit cards, safe deposit box contents and insurance policies, including password, agent and beneficiary information.
  • Will, trust, power of attorney, health care proxy, funeral plans and other documents showing how they want their affairs handled.
  • Contact information for lawyer, accountant, broker, financial planner, insurance agent and other advisors.
  • It might also be a good idea to order their credit reports to be aware of all current and past loans and credit accounts, as well as to look for any suspicious account activity. You can order one free credit report per year from each of the three major credit bureaus at
A few other tips:
  • Help your folks set up and follow a detailed budget so they always know how much money is coming in and going out. Numerous free budgeting tools are available online at such sites as, the National Foundation for Credit Counseling,, and MSN Money.
  • If you're helping pay or process their bills, request that copies of account statements be sent to your address as well, so you can quickly spot any errant activity.
  • You may also want to set up automatic bill payment for utilities and other monthly bills to avoid late payment fees. Just make sure the account they're drawn from is always sufficiently funded.
  • Schedule a session with a financial planner to help everyone understand the many tax, income and expense implications of retirement. If you don't have one, the Financial Planning Association is a good place to start your search.
  • The Department of Health & Human Services has a helpful list of Resources for older adults and their caregivers.
Take care of these financial planning details now, so that when your parents need your help, you'll be able to give them your full attention. And while you're at it, make sure your own files are in good order so your kids won't face the same hurdles when you get older.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.

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