It is a difficult subject to think about, but as those we love age, some begin to experience cognitive decline, and once-routine financial tasks, like paying bills and keeping up with bank statements, can to become increasingly challenging.
The onset of cognitive decline does not necessarily mean that mom and dad require full-time help, but adult children may find themselves steadily assuming more of an active role in their aging parents’ finances. This situation often presents difficulty. Many adult children grapple with how to even introduce the topic, let alone determine the appropriate level of assistance to give.
Here’s how you can make the process easier:
Take a proactive approach
Ideally, you (and your siblings) should have this important conversation with mom and dad well before they reach the point of cognitive decline. Ask that they put together a financial roadmap with background on accounts and investments, key usernames/passwords, and any other pertinent financial information. That way you already have a comprehensive guide and can avoid expending precious time and resources getting up to speed after decline has already taken effect.
If your parents are older and this topic has not yet been discussed, make it a point to offer regular assistance and guidance should you notice any red flags. Missed payments, late fees, ballooning debt, or uncharacteristic subscriptions are all common indicators that effective money management is becoming a challenge.
Make sure you also keep a watchful eye for signs of identity theft and financial fraud. Age generally makes the senior demographic a more vulnerable target, but catching fraud in the early stages can help to mitigate the outcome.
Develop a plan
Once you begin to assume increased fiscal responsibility, developing a detailed action plan is a great mechanism for keeping all involved parties aligned.
The nature of that plan should depend primarily on the pace and severity of decline. For situations in which mom and dad require only a bit of extra assistance with coordination and organization, small steps such as establishing automatic payments online, tidying accounts, and working together on budgets can alleviate a significant burden.
Keep in mind that you may need to consider a Power of Attorney (POA) in cases where cognitive decline is rapid (e.g., Alzheimer’s). POA is essentially a legal document that designates someone to make financial and investment decisions (among others) on behalf of the ailing party.
Additionally, it is equally important that all siblings are on the same page as well. Ambiguity only creates confusion and may run counterproductive to the ultimate goal of helping mom and dad. Ensure everyone knows their role and responsibilities. Sure, one sibling may take the lead, but that does not necessarily mean it’s a one-person job. After all, involving other siblings can help ensure everyone still has the time and resources available to manage other aspects of their personal and financial lives.
August 21 is National Senior Citizens Day, a special occasion to say thank you and express our gratitude to those seniors who have paved the way. By proactively planning for a situation in which you may need to lend a helping hand, take solace in knowing that after so many years of supporting you, you can now be there for mom and dad when they need you the most.
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Sabina Sewillo is a Family Wealth Advisor, Vice President and Financial Advisor with the Wealth Management Division of Morgan Stanley in Chicago. The information contained in this column is not a solicitation to purchase or sell investments.