Handling A Parent's Finances
There comes a time when a parent no longer feels safe making financial decisions or handling money. It is natural to turn to one of the children for this management, and it is likely the safest solution.
If your parent asks you to handle money, it is important to have a very frank dialogue about the intended use of the money for the near and distant future. I even recommend putting his or her wishes in writing, as many family and spousal arguments revolve around money. It is important these wishes are shared with all children.
If you are not in town and are managing from a distance, be very careful who you let manage money locally for your parent. Seemingly well-intentioned friends, neighbors, and even family members take advantage of the elderly.
For individuals with large sums of money, a trust account and professional management is preferred. For day-to-day and monthly expenses, one individual can easily manage.
I personally recommend two individuals with different interests jointly manage money.
You may ask, “Why two individuals?” My answer is that two individuals will have different motivations and interests; this system keeps everyone honest and focused on the best interests of the parent. Jointly agree on the general spending limit, and then place the money in a checking account monthly.
For larger financial decisions I especially recommend that two individuals agree on each decision. Items like stock purchases, the sale of a home or car, large furniture purchases, or care cost decisions would certainly apply. Set up monthly calls with your partner and discuss decisions at that time.
Keep your parent involved if they are able to participate, and remember that you are helping to preserve their assets so that they may live as comfortably as possible for as long as possible.
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