Checklist for taking over parents' finances: A step-by-step guide for adult children and caregivers

As parents age, they may require more support managing their finances. Should that responsibility fall to you, it's important to be prepared. This checklist for taking over your parents' finances can be an invaluable resource.

Recognizing the signs it's time to step in

If you're waiting for your parents to tell you that they can't manage their money anymore, you're likely going to be waiting forever. Most parents don't want to burden their adult child with the responsibility of managing their finances, or are unable to do so as they are experiencing cognitive decline. As such, be on the lookout for signs that your parents are unable to effectively manage their finances.

Common warning signs include:

• Unopened mail that looks like bills or missed payment notices

• Unusual purchases like lavish gifts or unopened online shopping boxes in the house

• Frequent calls from creditors

• Behavioral indicators like memory loss or confusion over financial matters

• Being targeted frequently by scammers

If one or both of your parents have some measure of cognitive decline or dementia, it’s important to find support for managing their finances to ensure they don't overspend on a fixed income, miss important bills, or become a target of financial abuse, like scams or fraud. If you notice  any of these indicators, act early to avoid potentially serious financial pitfalls.

Step-by-step checklist for taking over parents' finances

There are a number of legal and financial steps you may have to take to take over a parents' finances, but that may be the easiest part. Having the conversation in the first place and getting the rest of your family on board may present more significant challenges. With this aging parents' finances checklist, you can leave no stone unturned.

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Start the conversation

Some parents may be more willing than others to discuss you managing their finances. Regardless, approach this topic gently and with sensitivity. The conversation should be framed as emergency planning rather than taking control of their money.

Coming with a unified front with siblings, grandchildren, or other key family members will help the conversation resonate with your parents, so take the time to coordinate beforehand and agree on a strategy.

Assess and organize financial documents

Once you have your parents' consent, it's time to get organized. Work with them to gather all key documents, including tax returns, bank statements, wills, property deeds, and account details. All of your parents' accounts and important financial records should be accounted for. Get their login credentials for accounts, especially those that they use to pay bills or loans, and make sure they're securely organized.

Ideally, they'll already have it all organized in a single place, but if they don't, you should create a secure, centralized system for managing and storing this information. That might be in a locked file cabinet, or you could take steps to digitize their records.

Understand current financial status

With the information you gather, you should start to paint a picture of your parents' financial status. Create an inventory of all income sources, assets (like properties, savings, and stock holdings), and liabilities (like loans and debts). When you've visualized everything, create lists of monthly bills, recurring subscriptions, and service providers, and how each of these is paid, so you understand how your parents' money moves each month. From there, you can create a budget, eliminate unnecessary spending, and simplify your parents' finances.

Consolidate accounts and automate payments

One of the most important steps you can take is to simplify your parents' finances. As much as possible, try to reduce confusion by consolidating accounts to a single checking and savings account and setting up automatic payments wherever possible to ensure utilities, housing costs, and other recurring bills are paid automatically from these accounts. When you can pay your parents' bills remotely, it can save a lot of headaches.

Establish legal authority

You'll need legal authority to manage accounts in your parents' name. As such, it's important to obtain a financial and medical power of attorney. This will make it easier to manage and pay for in-home care for your parents, make changes to accounts, and have the legal authority to make decisions on their behalf if they're incapacitated.

Protect against scams and fraud

Unfortunately, older adults are often targeted by scammers and fraudsters. When you take over a parent's finances, sign up for credit monitoring and take some time to audit their email to opt out of spam and solicitations. Even legitimate company advertising can be predatory to older adults who struggle with overspending.

Keep finances separate

Your money and your parents' money are not the same. Avoid mixing personal funds with your parents' finances to prevent misunderstandings and potential conflicts with family members. Even more importantly, adding your assets to theirs could create eligibility issues for benefits like Medicaid, as you must meet certain income and asset thresholds to qualify.

Document every transaction

Finally, clear record-keeping is essential to showing your parents and family members exactly how their money is being used and ensuring there's no misuse of funds. Digital tools make tracking payments, withdrawals, and transfers easier as they keep an automatic record, but it's your responsibility to ensure you have easy access to these records.

Key resources to make the process easier

Taking over aging parents' finances can be an emotionally draining and logistically challenging process. Fortunately, there are plenty of resources to help you go through the process.

Monitoring tools

Services like Greenlight Family Shield make it easier to track your parents' financial activities and alert against potential fraud. With Greenlight, you can keep an eye on your parents' spending without taking full control, giving them increased autonomy while having the peace of mind that Greenlight's tools will alert you to suspicious or excessive transactions.

Legal guidance

Working with an experienced elder law attorney is an important step in older adult care. From estate planning to setting up a trust to pay for in-home care, an experienced attorney can formalize your financial plans and provide necessary guidance to ensure you create a plan that works for your whole family.

Family communication tips

One of the most challenging parts of taking over an aging parent's finances may be getting the family to understand why you're doing it. It's important to be completely transparent and bring siblings and extended family into the conversation early. Make sure they understand your reasons for wanting to take over a parent's finances and align on how you all feel the process should be managed.

FAQs

When should I take over my aging parents' finances?

There isn't always an obvious time to do so. When they begin showing signs of cognitive decline or an inability to pay bills and meet other financial obligations, it's probably time to at least have the conversation. Some people observe the 40-70 rule, which suggests that when adult children  turn 40 or a parent turns 70, it's time to begin discussing estate planning and end-of-life planning.

Should I put my name on my aging parents' bank account?

While becoming a joint account holder is a good way to conveniently manage finances, you become financially responsible for any accounts that you share with your parents. If they have a knack for overspending or racking up credit card debt, that could impact your finances, as well. A better alternative may be to obtain a power of attorney or become a legal signatory on bank accounts.

How do I monitor my aging parents' finances?

Apps like Greenlight offer comprehensive, intuitive tools to support monitoring your parents' accounts to ensure they're spending responsibly. If you have financial power of attorney and have submitted the necessary documentation to their bank, you may also be able to sign up for online account access so that you can easily monitor transactions that way as well. 

How do I pay my parents' bills?

The simplest way to pay your parents' bills is to get access to their accounts and set up automatic payments. This way, their bills will get paid automatically at the same time every month, so they're not late on payment or drawing from accounts with low or no balances.