Taking over an aging parent's finances is a difficult -- but important -- step to protect them from the consequences of neglecting their accounts. But once adult children have made that difficult decision, they may find that they have to deal with another obstacle: distance. In our mobile society, many of us live far from our parents and with our current housing market difficulties, relocating a young family or an elderly parent can be tough.
"It's a challenge, to say the least," says Marlo Sollitto, contributing editor of Agingcare.com, an online community of caregivers.
Thanks to online services, it is possible to manage your parent's finances remotely, but the first step as always is talking to your parent and getting informed about all of his or her finances, including all the accounts and where the records and documents are kept.
"You'd be surprised at how many people don't know anything about their parents' finances," Sollitto says. Agingcare.com has a useful ten-point list of items you should find out before you take over from near or far.
Get the Power
An important step after the conversation with your parent should be to speak to an attorney or accountant about securing a power of attorney or becoming a co-signer on your parent's accounts, says Sollitto. With either one, you can get electronic access to your parent's bank accounts to balance their checkbook, pay bills, and arrange for direct deposit of pension payments or disbursements from investment accounts.
Keep in mind that if you become a co-signer on the account, you become a "joint account holder," and the balance will transfer to you upon your parent's death; if that's not what you want to happen, you may need to set up a trust or talk to your bank about other options, says Chas Rampenthal, life coach of the online legal site LegalZoom.
You may want to hire a CPA to handle your parent's taxes, even if you take care of all the other accounts yourself, says Sollitto, especially since there are deductions available for medical and other expenses that caregivers may not be aware of.
If your parent is not already paying bills electronically, switch now and have the bills sent to your email address, along with any bank and investment account statements. Cutting off paper bills will also help foil identity thieves who could lift information from your parent's mail.
Citibank and other banks offer e-bill services, which link utility bills to a bank account. That way you can track and pay all bills electronically from one point, rather than surfing across several utility company sites to keep track of them.
You can set up recurring automatic payments for some bills that have stable monthly balances, such as rent or condo fees. Also consider switching to level pricing options offered by some utilities, which set a stable monthly fee, rather than rely on meter readings. This can also be useful in budgeting expenses for a retiree on a fixed income.
Get a Virtual Wallet
An electronic funds transfer makes it easy to pay regular, domestic employees remotely, such as a housekeeper or home care aide, while a payment service like Citibank PopMoney enables you to make payments to individuals electronically with just the person's email address or mobile number. This can be very useful for paying occasional expenses such as a plumber, handyman, or even a kid to shovel the snow from mom's driveway in winter.
Even tax bills can be paid electronically. You can open an account for your parent in the Electronic Federal Tax Payment System run by the Department of the Treasury and use it to make payments on most federal tax filings via electronic transfer from a bank account.
A Final Tip
Keep your influence on your parent's decisions to a minimum, Rampenthal warns. "Anything else can jeopardize the underlying legality of any documents they sign." Still, he recommends sitting down annually with your parents and making sure your plans are up-to-date. "An estate plan is a living document, and it is only effective if kept current," he said.
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