Preparing Senior Finances for Help

As people age, they may struggle to manage their money, especially if they experience a health condition or diminished capacity. Older adults might start to make bad financial decisions or become targets of fraudsters.
 
No one wants to find themselves in that situation – and you don’t have to. By coming up with a strategy now, when you’re healthy, you can safeguard your money in the years ahead, come what may.

Talk to Your Family

If you’re no longer able to manage your money at some point, you’ll want someone you trust to make decisions on your behalf.
 
So have an open, honest conversation with your children or others who could step in to help. Talk to them about your priorities, give them an overview of your finances (even if you don’t want to share details quite yet), then work together to create a plan.
 
That way, you can move into the future confidently, knowing that your finances will be in good hands. And if your loved ones eventually need to help, they won’t have to scramble to unearth the details of your financial life. They’ll have the information they need at hand, and they’ll know just what to do.

Organize Your Paperwork

Next, you’ll want to gather your financial documents. Collect and organize your financial information so your family members or other helpers can easily find everything they need.
 
You’ll want to gather:

• A copy of your driver’s license
• Important personal documents such as birth, marriage, divorce, and death certificates
• Checking and savings account information including recent statements, account numbers, passwords, and PINs
• Brokerage account information including recent statements, account numbers, passwords, and PINs
• Social Security payment information
• Retirement account summaries for any 401(k) plans, IRAs, pension plans or military benefit plans
• Tax returns for the most recent seven years, including W2 forms and proof of deductible expenses
• Your home deed
• Your mortgage statement or rental lease
• Property tax records
• Homeowners insurance policies
• A list of debts including account numbers and names of the issuing financial institutions
• Health insurance policies including Medicare, health insurance or supplemental health insurance, disability insurance, and long-term care insurance
• Life insurance policies
• Any partnership agreements if you co-own a business
• Vehicle titles
• Auto insurance policies
• An inventory of your assets with appraisals for valuable belongings
• Your will and any other estate planning documents
• Names and contact information for key advisors such as financial planners, attorneys, accountants, and health care providers

Once you’ve gathered your paperwork, give someone you trust access. Write down the location of your documents, and if you use a safe-deposit box, give them a copy of the key.

Consider Providing Account Access

Consider adding someone you trust as a secondary contact for your financial accounts. They won’t have access to funds, but if your bank or broker notices any unusual activity, they can reach out to your contact to discuss any concerns.
 
Or you might go a step further and add a trusted family member or friend to your account. Then they’ll be aware of your finances and, if you need help, will have access to your account.

Help Your Advisors to Help You

Give your financial advisor and other key advisors the name and phone number of an emergency contact that you trust. Then if they can’t reach you directly or notice unusual behavior, they can notify your contact person.

Create a Financial Power of Attorney

If you become incapacitated, your bills will still need to be paid. Your taxes will still need to be filed. Who will step in to help? A durable financial power of attorney can save the day.
 
This is a legal document that gives someone you trust – your agent – the authority to make decisions about your finances. The document is durable because it remains in effect when you can no longer handle your finances yourself. (If you don’t have a durable power of attorney, a judge will decide who stands in for you.)
 
You might grant your agent the right to:

• pay bills for you and your family
• collect Social Security and other benefits due to you
• oversee your retirement accounts
• invest your money
• handle transactions on your behalf
• buy, sell or maintain real estate with your financial institutions
• prepare, file and pay taxes for you
• set up a trust for you
• buy or sell insurance policies for you
• run your small business

You can draw up a durable power of attorney that gives your agent as much power – or as little – as you wish.
 
If you’re married, you might assume that your spouse already has the legal power to handle your joint finances, but that isn’t always the case. Depending on where you live, your partner may not be able to, for example, sell your home or vehicle without your signature. And if you’re incapacitated, your signature won’t be legally valid.
 
Speak to an attorney about whether creating a durable financial power of attorney makes sense for you.
 

 

Sources:
 
Financial Industry Regulatory Authority (FINRA), “Financial Planning for Diminished Capacity,” published November 23, 2022
 
Consumer Financial Protection Bureau, “Planning for Diminished Capacity and Illness,” accessed September 26, 2024
 
Experian, “Prepare Your Finances to Care for an Elderly Family Member,” published August 18, 2021
 
PBS, “Caring for Your Parents – List of Important Documents,” accessed September 27, 2024
 
US Securities and Exchange Commission, “Diminished Capacity,” accessed September 27, 2024
 
NOLO, “Durable Financial Power of Attorney: How It Works,” updated February 8, 2023
 

 
This article was created in accordance with the Patelco editorial policy.