As people grow older, they often struggle with day-to-day tasks such as managing their household budget and finances. This is especially true for those living with acute or chronic health conditions that may impact their memory or cognitive abilities. Age-related changes can make keeping on top of utility bills, investments and expenditures a real challenge for some. 

Unfortunately, older adults are also particularly vulnerable to cybercrime. According to the 2021 IC3 Elder Fraud Report prepared in conjunction with the FBI, more than 92,000 seniors aged 60 and older reported fraud-related losses totaling $1.7 billion in 2021. 

If you’re a family caregiver, you may find yourself wondering how you can protect your parents against financial fraud while protecting their hard-earned retirement savings. 

In this guide you’ll learn what steps you can take to assume the management of your parents’ finances. You’ll also find out what you should do to reduce the risk of family conflicts and legal issues over your parents’ money.

Ask Your Parents What Their Wishes Are

If your parents don’t yet need your help with their finances, now’s the perfect time to have a heart-to-heart about their future plans and wishes. Ask them how they’d like their money managed should they become incapacitated, and what, if any, arrangements they already have in place. 

  • Discuss who will assume responsibility for their finances, and under what circumstances
  • Decide which family members will be privy to information about your parents’ finances
  • Talk about how you’ll handle potentially difficult situations with your siblings who may ask for an advance on their inheritance, or to borrow money from their parents’ savings

Verify Their Legal Arrangements

Before assuming any financial responsibilities, start by verifying any legal arrangements your parents have made. This includes asking if they have a valid power of attorney — a legal document that grants one or more individuals the power to act on the grantors behalf. 

If your parents haven’t yet prepared a power of attorney, and they’re capable of doing so, have them prepare one. Not only can this essential legal document grant you the right to manage their day-to-day finances, but it can minimize the risk of family and legal conflicts. 

You can find a local elder law clinic through your regional Area Agency on Aging.

You’ll also want to collect all their other important legal documents, including:

  • Your parents’ wills
  • The deeds to any properties they own
  • Their birth certificates, citizenship or immigration papers
  • Their insurance policies
  • A copy of their mortgage, if they have one
  • Investment statements

Make Gradual Changes

Whenever possible, introduce changes to your parents’ finances over a period of time. This can give them time to get comfortable with the new arrangements, and keep you from feeling overwhelmed. 

  • Start by reviewing all their recurring expenses such as utility, insurance and mortgage or rental payments
  • Add your name to their utility accounts so you can contact service providers on their behalf

Use A Bill Paying Service

Regardless of whether you’re able to slowly assume responsibility for your parents’ finances, or if you have to take on these responsibilities right away, you’ll want to take advantage of a bill paying service. 

How a Bill Paying Service Works

A bill paying service, also known as a bill management service, consolidates all your parents’ recurring expenses into a single, managed account. Their phone, electricity, gas, insurance and rent or mortgage bills are sent to the bill management company, either by mail or electronically.

A designated bill payment account manager assumes responsibility for reviewing, paying and archiving all the bills. You simply fund the bill payment account as needed, and the account manager handles the rest. 

In addition to taking care of day-to-day financial management, the bill paying service may be able to help with insurance claims and tax records. 

It’s important to know that all bill paying service account managers are carefully vetted, and these companies employ a number of security protocols to protect seniors against fraud and financial exploitation. 

A bill paying service may be ideal for:

  • Family caregivers who don’t have the time to assume full responsibility for their loved ones’ day-to-day finances 
  • Seniors who don’t want to burden their adult children with extra work
  • Caregivers who want to oversee their parents’ household expenses in a way that’s fully transparent, and provides third-party verification of all payments

Set Up Separate Finances

Even if you’re on good terms with everyone in your family, it’s wise to keep your finances separate from your parents’ finances. 

Not only can setting up a separate bank account to deal with your elderly parents’ money make record keeping easier, it will help eliminate any confusion over who owns what. 

  • State laws around joint accounts vary, so check with your local bank manager to find out your options around managing your parents’ bank accounts.
  • Never use money from a joint account held with your parents to benefit yourself, as this could trigger suspicions from other family members or bank officials.
  • If your arrangement with your parents includes receiving compensation for your help, ask a trusted family member or friend to manage those payments.

Document All Transactions

Keep records of everything you do related to your parents’ finances. 

Not only can these records help you stay on top of their debts and investments, but good record keeping will go a long way towards preventing future family conflicts related to their estate. 

Be Aware of Cognitive Changes 

Unfortunately, many age-related health conditions involve cognitive decline. 

Currently, an estimated one in every seven seniors aged 71 and older suffers from a form of dementia. Alzheimer’s disease and vascular dementia can often trigger irrational fears about money, and lead seniors to accuse their trusted loved ones of fraud and theft. 

Be aware of any cognitive decline that your parents’ may be experiencing, and be sure to have these changes documented by their medical providers.