Aging Options

Managing a Loved One’s Finances: Some Basic Things to Know

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Are you managing finances for an aging parent or friend? Managing someone else’s finances is a big responsibility. What’s more, if you’ve paid attention to Rajiv Nagaich over the years, you know that many people find themselves suddenly thrust into the position of managing finances for a loved one without any preparation. The result can be stressful at best and disastrous at worst.

This week we read this article on the subject from Kiplinger. In the article, which is fairly brief, financial planner Tony Drake lists what he calls “four things to know” about serving as a loved one’s financial manager. While the article might be a helpful place to start, we think Drake has over-simplified more than a bit, so we asked Rajiv for the rest of the story. His comments are included below.

Managing Finances for a Loved One: Many Unanswered Questions

Drake begins his Kiplinger article with the obvious. “Taking over as the caregiver for a loved one can be stressful for many different reasons, and it comes with a lot of unanswered questions,” he writes. The questions he cites are important ones.

Drake lists the basics. “When should I take over? What needs to be taken care of? What would make them happy?” Here he blends health care power of attorney with financial power of attorney, pointing out that you may be called upon to make “medical or life decisions for your loved one.” This is a bit confusing to us: the POA for finances and health care decisions may very well be two different people. But let’s read on.

Managing Finances: A Difficult, Emotional Topic

Drake again points out that discussing the issue of managing a loved one’s finances is “a difficult topic to broach.” His advice: “You have to be open and honest with family members and tackle it head on. At some point, many of us will be in charge of our parents’ or elderly relatives’ caregiving and finances. We should be preparing our strategies now so we are ready when it happens.”

Later in the article, Drake lists some ways to introduce the subject of managing a loved one’s finances. However, in most case, we would suggest that a family meeting or conference, facilitated by an experienced professional, could be the best, most disarming way to start the conversation. Our team members at Life Point Law have facilitated hundreds of these conferences and would be glad to discuss the process with you.

Managing Finances: When Do You Step In?

Drake points out that deciding when to assume the role of financial caregiver for a loved one should be influenced by when that person is ready. “When you visit,” he writes, “check for unopened mail or undeposited checks lying around. These both become very common. This could be a sign that they are no longer able to go to the bank or may not understand why they should.”

While we understand where Drake is coming from, we would argue that these and other telltale warning signs probably don’t signal that your loved one is “ready” for you to step in. Rather, if you see signs that the person you care about is losing the ability to manage money carefully, you and other family members need to take action whether your loved one is ready or not. You’ll probably still get strong emotional pushback. The reaction might even get worse if cognitive decline is present.

For more on things to watch for in a loved one’s finances, check out this Blog article from a few weeks ago.

Managing Finances: How Do You Start the Conversation?

“No matter when these discussions happen, they’re going to be difficult,” says Drake. “But avoiding them altogether can lead to major problems down the road for you and your loved one.” He’s right. The longer families delay, the greater the danger of major financial pain.

We also agree with Drake’s emphasis on preparation. “Don’t go into this conversation without a plan,” he advises. “You don’t want to upset your loved one or make them uncomfortable.” The reasons are obvious. Financial issues are not only very private, but the loss of independence that most seniors fear becomes very real when the discussion turns to money matters.

Drake’s recommendation is the right approach. “Reassure your loved one that this isn’t about taking over their finances,” he writes – instead, “it’s to help set them up for future success.”

The article suggests you consider who else should be included in this conversation, and while he doesn’t use the term “family conference” or “family meeting,” it does sound like that’s what Drake is advocating. “It might be beneficial to have an outside perspective to help ease any tension or give any pieces of professional advice,” he says. “If you can get help from a financial adviser or an attorney who can lead you in the right direction, that is a great start.”

Managing Finances: What Are the Basics?

Drake’s advice concerning the mechanics of managing finances for a loved one seems to us to be far too simplistic. First, he suggests, you need to “have the conversation” with your loved one about whether they’ll accept your help. At that point, he writes, “it is now time to take a closer look at your aging loved one’s financial situation. This includes annual income, credit card debt and how much they receive in Social Security.”

You start, he says, by diving into your loved one’s budget, assuming they have one. “Make sure you have an understanding of their monthly expenses, how much money is coming in and how much is going out,” Drake says. “How are they paying their bills? Are they automatic? Being paid online? Or are they using paper checks?”

He mentions the possibility of a life insurance policy and states that “you don’t want them to lose those benefits because it stops being funded.”  But he doesn’t mention other essential questions that are equally important. Is there a long-term care insurance policy? Are property taxes current? Does your loved one have a reverse mortgage, a regular mortgage, a home equity line of credit, or HOA dues? All these, if neglected, can wreak havoc unless someone steps in. That someone might just be you!

Managing Finances: What Else Do You Need to Know?

At some point, says Drake, you need to determine if your loved one has an estate plan. “If not,” he says, “they should.” This is true no matter the size of the estate.

“I always recommend my clients find a good elder law attorney,” Drake advises. “They can collect the correct documents for you and your loved one, ensuring you are making the decisions, rather than the state, should they pass away.”

Finally, he touches – briefly – on the need for a health care power of attorney. “This is something you would ideally want to do before it’s too late so your loved one can pick that person on their own,” Drake advises. “This will ensure that you, or another family member, is legally empowered to view their medical records and decide where and how they are treated.”

These days, along with financial and health care POAs, it’s also essential that families have a mental health power of attorney in place. That way, even if your loved one is physically healthy, you’re empowered to step in with banks and other financial institutions should cognitive decline rob your loved one of the ability to handle their finances responsibly.

Rajiv’s Take: Helpful but Incomplete

We asked Rajiv for his response to this article, and he agreed that the approach is the same old thing most traditional financial planners advocate.  “It’s really infuriating how so many financial planners say the same thing,” says Rajiv. “If you have to step in to help someone, all you need is a nice conversation and access to the checkbook and everything turns out fine. But that almost never happens that way in real life!”

Instead, he says, arguments can escalate between family members when basic issues of aging suddenly rear their heads. Even a well-meaning caregiver can find himself or herself drowning in the process.

Rajiv cites a few specifics. “Okay, let’s say your dad is showing signs of cognitive decline but he’s otherwise in good health. You say, ‘Dad, I’m concerned about your finances and I want to step in and help you.’  Your dad tells you to go pound sand – he’s fine and doesn’t want your bloody help. Then what do you do? Or what if Dad is physically frail and Mom is the primary caregiver, and they need to move to a smaller house. Their finances are a mess and you live 500 miles away with a family of your own. Now it’s a housing issue. What do you do then?”

He goes on, “My point is that these are not simple conversations and simple solutions. You as a so-called financial caregiver can find yourself in over your head very, very fast. I urge you to get help sooner rather than later. Come to a seminar. Call our office. Meet with an elder law attorney. Get all your siblings on board. You can do it – we’ll show you how and walk with you through the maze. Plan ahead and you can avoid a family disaster.”

Take a look at this recent article in which Rajiv explains how the family meeting is an important key to successful planning.

Breaking News: Rajiv’s New Book is Here!

We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public.  As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.

Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important new book. And remember, Age On, everyone!

(originally published at

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