How to prevent aging parents from giving away money

As parents age, it’s common for adult children to take part in their care. Part of that involves helping aging parents stay fiscally responsible and manage their finances effectively. 

Between the pervasiveness of financial abuse by scammers and fraudsters, cognitive decline that can lead to financial mismanagement, and the high cost of elder care, learning how to protect them is critical. Giving away money — whether through a scam or honest mistake — is a common pitfall. Here's how you can help prevent senior loved ones from being taken advantage of.

Signs your parent is giving money away

The signs aren’t always obvious. Some common signs to watch out for include: 

Unexplained financial behaviors

• Large, unexplained withdrawals from bank accounts: If you have visibility into your parents' bank accounts, you can watch out for large or unusual withdrawals. 

• Difficulty paying bills: Inability to pay bills may be an indicator that they've been spending too much.

• Sudden generosity: Extravagant gifts or an uptick in donations can be a red flag that someone is overspending and may not even realize it.

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Behavioral changes

• New relationship that coincides with new spending habits: Does your parent have a new friend or love interest who seems keen on making them spend more money? 

• Sudden changes in estate plans or wills: Even minor changes to an estate plan or will that are not communicated with others are concerning because they impact the entire family.

• Isolating from friends and family: Isolating oneself can sometimes indicate that a loved one is being unduly influenced by someone or is experiencing cognitive decline.

Tips to stop your parent from giving money away

Beyond monitoring concerning expenditures or behavioral changes, consider these strategies for approaching the topic with sensitivity and care. 

Start with understanding

Conversations about independence and money can be sensitive. It's natural to want to remain in control of your own life and finances. Approaching the topic with empathy, patience, and understanding can go a long way. Each family dynamic is different, but here are a few tactics that may be helpful:

• Explain why you're concerned, using specific examples.

• Make it clear the goal is protection and care, not to take away their independence.

• Give them space and time to share their perspective.

• Be ready with practical suggestions, potential solutions, or compromises.

Take proactive measures to protect their finances

The level of involvement you need to take depends on your loved one's unique circumstances.

If they're still independent but could benefit from support, you can be added as a secondary account holder. That gives you access privileges to their accounts but not control over the money. Depending on your bank or service provider, you can monitor account activity, such as balances and transactions, and receive alerts for major withdrawals or charges.

Other situations require more oversight. If your parent is consistently mismanaging money, for example, you might consider a power of attorney, which grants you or another qualifying guardian legal control of the finances.

For another layer of protection, apps like Greenlight Family Shield help keep your whole family and their money safe with benefits like:

• Fraud and suspicious activity alerts

• Financial account monitoring*****

• Up to $100K deceptive transfer fraud coverage***

• Up to $1M identity theft coverage***

• Optional debit cards with purchase protection**** for 2 adults

• 1% cash back,* 6% on savings**

• SOS and crash detection^

Practice (and plan) safer financial habits together

• Start early. If possible, discuss your parents' wishes while they're still independent. This helps everyone make informed, clear decisions and gives time to adjust to any changes. 

• Plan together. Work with your parents to audit their assets and develop a budget. Consider creating a trust to manage assets, provide a fixed income, or establish beneficiaries. 

• Consult a professional. Consider discussing a plan with a reputable financial advisor or estate planner and include your parents in the process so they understand how their assets will be managed and utilized. Start with anestate planning checklist.

• Stay informed. Be aware of scams and fraud that target older adults. Alert your parents about common scammer tactics and teach them security best practices, like never sharing private information or sending money over the phone.

FAQs

Can you legally take over an older parent’s finances if they’re mismanaging money?

You usually can, with the proper legal plan. Some families establish a power of attorney, which can grant you the authority to manage a family member's finances. This legal arrangement may have different stipulations, but it's often created to give an adult child control of finances if the parent is no longer able to make decisions for themselves.

Are you financially responsible for your aging parents?

You're not financially responsible in the legal sense unless your name is on any bank accounts, assets, or debts. However, many adult children do assume at least some responsibility for paying for elder care or helping to manage an aging parent's finances.

What do you do if an aging parent runs out of money? 

You can help minimize this risk with a solid estate plan. However, if you're concerned about your parents' financial situation, assess it thoroughly to understand the types of government benefits or short-term financial solutions they may be eligible for. Research programs like Medicaid and Supplemental Security Income (SSI) consider cutting expenses and seek professional financial or legal advice.

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