Taking control of a parent’s finances

[Human]

I’m interested in hearing from those of you that have taken control of finances on behalf of a parent(s). What are the nuts and bolts? What are some tips?

Background
My surviving parent has Alzheimer’s and is now in an assisted living / memory care facility (in another state, near another relative). I helped set up a low cost well diversified portfolio and have full authorization on the accounts (to sell, trade., transfer ...whatever). I also have full authorization on checking and savings accounts. Finally, I have Power of Attorney. I’m about to take over paying all bills, managing the sell of assets to cover expenses, RMDs, tax filings, and everything else related to finances.

Sample Questions

• What address do I use for service providers, banks, credit cards, etc. (parent’s or mine)?
• What are the considerations when I file taxes on their behalf?
• Did you set up a new credit card or account for any reason to help manage things?
• How have you kept siblings informed/updated?

I’m open to any advice and experience sharing you think would be helpful. Thanks!

 

[upset264]

I handled all financial affairs for my father, now deceased. He became a widower in 2006 and moved to an apartment very near my home. We had seen each other daily prior to that also. Like you I had a power of attorney, and was either joint owner or an authorized person on all his financial accounts. There were no siblings so that certainly simplifies matters. He was clear minded but deaf and walked with great difficulty. Over time he progressed to assisted living then eventually fell and broke his hip before going to a nursing home then passing away.

In this era of online accounts I don't think the address on accounts is that big an issue however using yours is the best approach. We had a problem with a social security 1099 one year that I didn't get, before you could get a copy online, and I think I had to take him to a social security office in person to get a replacement. What items did come by mail came to my house as having them go anywhere else increased the chance that it would not end up in my hands. This led to a problem one year with his medicare advantage plan when it came to light that his physical location at the assisted living facility, although in a neighboring town, was in a different county and the plan he had was not offered in that county.

I was a authorized user on a credit card account in his name that I used for all his needs.

I filed all his tax returns online acting on his behalf. I just filed them the same as he would have done if he had done it himself.

I do believe there's a process to have yourself set up as his representative with Medicare, and I needed it when the residency issue came up.

 

[target2019]

I’m interested in hearing from those of you that have taken control of finances on behalf of a parent(s). What are the nuts and bolts? What are some tips?

Background
My surviving parent has Alzheimer’s and is now in an assisted living / memory care facility (in another state, near another relative). I helped set up a low cost well diversified portfolio and have full authorization on the accounts (to sell, trade., transfer ...whatever). I also have full authorization on checking and savings accounts. Finally, I have Power of Attorney. I’m about to take over paying all bills, managing the sell of assets to cover expenses, RMDs, tax filings, and everything else related to finances.

Sample Questions

• What address do I use for service providers, banks, credit cards, etc. (parent’s or mine)?
• What are the considerations when I file taxes on their behalf?
• Did you set up a new credit card or account for any reason to help manage things?
• How have you kept siblings informed/updated?

I’m open to any advice and experience sharing you think would be helpful. Thanks!

For M-I-L and F-I-L (recently passed):

What address - Much simpler to use your mailing address.
Taxes - Sign as POA. Do your research with IRS to see what their policy is.
Credit card or account - Amazon CC and joint on the checking.
Siblings informed/updated - This can generate an incredible amount of chatter, and not all good.

From bill paying account, download all transactions each month. This makes tax time go much easier.
Only use the cc for their benefit.
Scan and file the important papers you receive.
Save all reports from institutions (balances, and so on)

Mid-year and End-of-year I summarize all accounts, by investment.
End-of-year I summarize Income and Expenses. Always shared that with F-I-L.

We've done the above for more than a dozen years. To minimize effort, I try to do only what's necessary. The summary sheets I've built are very useful when new decisions have to be made.

 

[pb4uski]

I manage my Mom's finances. She is 87 and fine but forgetful and not knowledgable at all about finances.

I use her address for all her accounts but in your case where your dad has Alzheimers and is in assisted living it may be a good idea to use your address.

I file Mom's taxes too... electronically.

I probably should add me to her credit card account for convenience. Currently, I put any charges for her on my Wells Fargo VISA (which I rarely use for anything other than Mom stuff) and then transfer the same amount for payment from Mom's Wells Fargo checking to cover the charges.

My siblings trust me and are not at all interested. One of my 4 sisters is also involved in the finances... generally her and I make tentative decisions, recommend to Mom and then proceed with her approval.

 

[folivier]

This was about 20 years ago but when my dad started with dementia and was beginning to talk about and make bad financial decisions my siblings and I had many discussions about this among ourselves and our dad. Dad was not in a state of mind to understand what he was doing and since his entire assets were invested in stocks we decided that I would become his guardian. Hired an attorney, had a hearing in court after having the requisite doctors opinions, and he was named incompetent and I named as his guardian. Simple procedure but very emotional experience for me. I then had full control over his assets, medical decisions, etc. and was able to protect his assets and make certain he had proper medical care.

 

[Bamaman]

Looks as if your questions have been addressed. When our aunt passed, she had my cousin handling her affairs for over 12 years. He had converted all investment assets to CDs and Cash equivalents. It is just about impossible to take any amount of risk for higher returns whenever you're in that position.

My other point regards avoiding probate. So very often, probate can be avoided if real estate has been liquidated on those in assisted living and full nursing home care. Heirs can be added as joint owners of beneficiaries on investment accounts.

In our case, my aunt left us with an interest in a real estate partnership owning an office building. Some of the partners inherited their share and some of the partners were in their 90s. Getting them to put a large sum of cash in to purchase our interests was a distasteful process. Since everyone were CPAs and lawyers, I am sure we were taken advantage of. And probating that will cost us dearly.

 

[JoeWras]

Let me give you just one warning about ADDRESS CHANGES.

My dad gave me permission to handle his affairs. I was POA only after he became incapacitated. Before that, he said: "Handle it." So, I changed the address to mine, DIFFERENT STATE, and handled everything online. We wanted no mail to get to him because it confused him. Every bank statement ended up in a weird call to me and banks. So, that all stopped and everyone was happy, except...

Uh oh. Headaches. In the mind of the banks, he was now a resident of my state. Now, because interest was so low, it ultimately was not a problem because his accrued interest was under the limit to report income tax in my state. The bank sent me all kinds of paperwork about state reporting. Really surprising!

There is a way to do this correctly where the mail goes to another state and you don't get tagged as a resident. If that is your case, make sure you do address changes carefully. It is unlikely anything done on-line checks this box to NOT change state of residence. It usually requires a call or in-person visit to do this kind of address change.

 

[mountainsoft]

I’m interested in hearing from those of you that have taken control of finances on behalf of a parent(s). What are the nuts and bolts? What are some tips?

My mom had a stroke last year and had me set myself up as her Power of Attorney while she was in rehab. I immediately changed all of her mail to my address (she lived two hours away). The only hiccup was her Railroad Retirement Benefit. They didn't accept a POA, so I had to fill out paperwork to be her representative payee (even though the money still went to mom's checking in her name). I think Social Security has the same requirement.



We moved mom to an assisted living and closed all of her accounts at her old house (utilities, cable, garbage, etc.). No questions asked on any of those. I did have to take my POA documents to her bank to close her safe deposit box and add my name to her accounts.


I cancelled her credit card, she hadn't used it anyway and doesn't need it now.


At this point, we can't afford to lose any money with investments, so I opened a new online savings account (1.5% interest) for her and moved the bulk of her money to that account. I also deposited the money from the sale of her house in the online savings account. Then I set up an automatic transfer to her checking account every month to pay the monthly bills her retirement income doesn't cover.


Mom has a CD at the bank that pays a ridiculous .15% interest. I'll be moving that to the savings account when it matures in September.


I filed mom's tax return online last year. No problems other than I didn't have her old tax return info so I had to mail it in instead of filing electronically. I suspect it will be easier to do this next year. Mom had quit filing returns years ago since she was below the income threshold, but I filed anyway to get $60 back. Not much but $60 is worth a few minutes of my time.


I'm now joint owner or authorized signer on all of her new utilities and medical accounts.

 

[REWahoo]

Mom has a CD at the bank that pays a ridiculous .15% interest. I'll be moving that to the savings account when it matures in September.

Take a look at the early termination fee for that CD. It could be financially beneficial to move that money to a 1.5% savings account now even after paying the penalty.

 

[bizlady]

For M-I-L and F-I-L (recently passed):

What address - Much simpler to use your mailing address.
Taxes - Sign as POA. Do your research with IRS to see what their policy is.
Credit card or account - Amazon CC and joint on the checking.
Siblings informed/updated - This can generate an incredible amount of chatter, and not all good.

From bill paying account, download all transactions each month. This makes tax time go much easier.
Only use the cc for their benefit.
Scan and file the important papers you receive.
Save all reports from institutions (balances, and so on)

Mid-year and End-of-year I summarize all accounts, by investment.
End-of-year I summarize Income and Expenses. Always shared that with F-I-L.

We've done the above for more than a dozen years. To minimize effort, I try to do only what's necessary. The summary sheets I've built are very useful when new decisions have to be made.

+1 SPOT ON with nearly everything we did/experienced

 

[MichaelB]

When I changed address for DM’s accounts, I titled them “c/o “ followed by my name and address, to avoid confusion about where she resides.

I also canceled her credit card and froze her credit.

 

[mountainsoft]

Take a look at the early termination fee for that CD. It could be financially beneficial to move that money to a 1.5% savings account now even after paying the penalty.

We had to withdrawal 30K from her CD earlier this year to pay her bills before we were able to sell her house. Her CD is at US Bank and the early termination fee was very high. It cost us a few hundred dollars, but she needed the money. I don't remember what the penalty was now, but it's worth waiting till it matures in September.

 

[Dtail]

I am in control of all my parents investment assets. My father use to trade in his accounts, but was not keeping up with it. Suffered some losses in 2016 on individual tech stocks.
My mother now pays the bills and is fine with it. I assist her with any mail she is not familiar with, plus any investment mail.
My father is still competent overall, so I run any investment decisions by him for agreement. My siblings have no interest in managing the finances.

 

[OldShooter]

Lots of good stuff here that matches with my experience dealing with my mom's finances. Fortunately for the family, she was in full possession of her marbles until she died. So my experience is slightly different.

One thing that has not been mentioned is contacting the assisted living facility for advice. This is not a new thing for them and they may have some case management ideas and experience that you can benefit from.

Another thing to be aware of, sadly, is caregiver theft. This is quite common. I would remove any small/portable things of value, like jewelry, collector coins, collector stamps, etc. My mom had a locksmith add a good lock to her jewelry drawer and after her death we still found an empty box that formerly held a valuable gold necklace.

Along the same line, eliminate your parent's access to money. Credit card numbers, checking, etc. Talk to the facility about this to see if there are any needs for money and what are the safe mechanisms they can suggest for handling it. My wife was in a bank trusts & estates business where they handled finances for the frail elderly and she has numerous stories about caregivers writing checks for their benefit on the customer's account. This often occurred when the caregiver had authority to write checks for weekly groceries, etc., something that fortunately does not pertain in an assisted living facility.

Even paranoids have enemies.

 

[ExFlyBoy5]

Lots of good points, but I will make just a couple for your consideration. I have been managing my Dad's accounts for about a year. I didn't add my name on anything and have used the POA to move anything around, and so far I have had no issues. It probably helps that most of his liquid assets are in a locally owned bank, and we are friends with the management.

Co-owner on accounts. This could become an issue if you hurt someone (say a car accident) and they come after your assets. Any accounts that you hold in JOINT could be taken. Yes, the odds of that happening are VERY low, but still worth considering.

Second, as the POA, you have a fiduciary duty to manage the funds to the benefit of your parents...don't take this responsibility lightly. Most of my Dad's recurring expenses are charged onto his credit card, and I pay it monthly out of his checking account. Non-recurring charges (maintenance on his house, groceries, medical expenses) I put on my credit card, but then I reimburse myself once a month...and all of it is recorded and stored in case there are any questions. This duty *could* be heightened depending on how your parent's estate is set up. In my Dad's case, I am the beneficiary to all his bank/brokerage accounts, and I also a significant beneficiary of his estate (that is covered by his pour over will). Because of this, I know that family members (who haven't been a part of his life for many years) could come out of the woodwork and try and show that I was managing his financial affairs to MY benefit. To add an extra layer of protection for my Dad, I review his finances with his attorney once every 60 days.

You very well think this is simply too much, but I would prefer to be better safe than sorry. And 3 years of law school made it even worse!

By the way...this is NOT intended to be legal advice as I am NOT A LICENCED ATTORNEY.

 

[Dtail]

Lots of good points, but I will make just a couple for your consideration. I have been managing my Dad's accounts for about a year. I didn't add my name on anything and have used the POA to move anything around, and so far I have had no issues. It probably helps that most of his liquid assets are in a locally owned bank, and we are friends with the management.

Co-owner on accounts. This could become an issue if you hurt someone (say a car accident) and they come after your assets. Any accounts that you hold in JOINT could be taken. Yes, the odds of that happening are VERY low, but still worth considering.

Second, as the POA, you have a fiduciary duty to manage the funds to the benefit of your parents...don't take this responsibility lightly. Most of my Dad's recurring expenses are charged onto his credit card, and I pay it monthly out of his checking account. Non-recurring charges (maintenance on his house, groceries, medical expenses) I put on my credit card, but then I reimburse myself once a month...and all of it is recorded and stored in case there are any questions. This duty *could* be heightened depending on how your parent's estate is set up. In my Dad's case, I am the beneficiary to all his bank/brokerage accounts, and I also a significant beneficiary of his estate (that is covered by his pour over will). Because of this, I know that family members (who haven't been a part of his life for many years) could come out of the woodwork and try and show that I was managing his financial affairs to MY benefit. To add an extra layer of protection for my Dad, I review his finances with his attorney once every 60 days.

You very well think this is simply too much, but I would prefer to be better safe than sorry. And 3 years of law school made it even worse!

By the way...this is NOT intended to be legal advice as I am NOT A LICENCED ATTORNEY.

Interesting point that I didn't think of. Being joint on my parents' bank account, allows very easy access of money movements though.
I do have an Umbrella Policy, which hopefully would limit this kind of potential damage.

 

[ExFlyBoy5]

Interesting point that I didn't think of. Being joint on my parents' bank account, allows very easy access of money movements though.
I do have an Umbrella Policy, which hopefully would limit this kind of potential damage.

This certainly could make things easier, but if the assets are substantial, there is the possibility that a hungry attorney could make it a huge pain for you. Sure, as soon as that attorney gets the umbrella coverage binder, they will most likely push the client to settle (easy money..NOW!), but there are no guarantees. I too have an umbrella policy (as does my Dad) but I just didn't think it was worth the risk...but yes...it's remote and I wouldn't lose too much sleep over it.

 

[Texas Proud]

I was put on my mom's checking account and paid her bills online... I picked up her mail at her condo... but, she recently moved to memory care and I am still working through what I plan to do next...


Just signed her condo for a different electricity provider and put it in my name...


Have an old CC I was not using and am now using it to pay her expenses that are not through the memory care bill...


All other comments here are good and I am sure I will do some of them... so thanks for the question...

 

[OldShooter]

... I do have an Umbrella Policy, which hopefully would limit this kind of potential damage.

This statement made me curious so I went to read my umbrella policy. I am not an insurance guy but I believe that breach of fiduciary duty (which is what we are talking about here) is not covered for me because in the exclusions I find:

"Personal injury caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict personal injury."

Going back to the definitions, I find that "personal injury" is fairly specifically defined to include things like false arrest, slander & libel, and publication of material that violates a person's rights to privacy. IOW some fairly limited events.

The rest of the policy is concerned mostly with bodily injury and property damage.

So my conclusion from reading my umbrella is that I would not be insured against a claim of breach of fiduciary duty. I have no reason to worry about that, but if I did I would be talking with my insurance agent and making sure I had something in writing.

 

[JoeWras]

This statement made me curious so I went to read my umbrella policy. I am not an insurance guy but I believe that breach of fiduciary duty (which is what we are talking about here) is not covered for me because in the exclusions I find:

"Personal injury caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict personal injury."

Going back to the definitions, I find that "personal injury" is fairly specifically defined to include things like false arrest, slander & libel, and publication of material that violates a person's rights to privacy. IOW some fairly limited events.

The rest of the policy is concerned mostly with bodily injury and property damage.

So my conclusion from reading my umbrella is that I would not be insured against a claim of breach of fiduciary duty. I have no reason to worry about that, but if I did I would be talking with my insurance agent and making sure I had something in writing.

I thought it was more of a situation like a car accident. If you are joint with mom/dad, your accident could drain your parent's account.

An umbrella would help in that situation.

 

[Dtail]

This statement made me curious so I went to read my umbrella policy. I am not an insurance guy but I believe that breach of fiduciary duty (which is what we are talking about here) is not covered for me because in the exclusions I find:

"Personal injury caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict personal injury."

Going back to the definitions, I find that "personal injury" is fairly specifically defined to include things like false arrest, slander & libel, and publication of material that violates a person's rights to privacy. IOW some fairly limited events.

The rest of the policy is concerned mostly with bodily injury and property damage.

So my conclusion from reading my umbrella is that I would not be insured against a claim of breach of fiduciary duty. I have no reason to worry about that, but if I did I would be talking with my insurance agent and making sure I had something in writing.

Fair point. Will check my policy. Thanks.

 

[anethum]

I've been handling my parents' finances (now it's just my mom who is alive) for many years. I haven't changed any addresses because I live 10 minutes away and am there often. My sibling and I both have POA but I do all of the work.

First my dad, and now my mom, have needed expensive home care. I have had to make decisions regarding which financial assets to sell to supplement the pension & SS to pay the caregivers. This involves both tax considerations as well as asset allocation considerations. My dad did a pretty good job with their investment choices. There was a mix of stock funds and bond funds. The stock funds had significant LTCG, whereas the bond funds had minimal LTCG. After my dad had a stroke in the middle of the tax year and needed 24/7 care to remain at home, I initially was selling from the bond funds to minimize LTCG. But toward the end of the year, it became apparent that they'd owe minimal taxes due to the large medical deductions which had accumulated for several months. So I then sold some of the worst-performing stock funds (which still had significant LTCG). As his care carried over to the next tax year, I went back to selling mainly bond funds. He died early that year.

When my dad died, my mom inherited my dad's assets including his tax-deferred IRA. With the step up in basis with the assets which had been in my dad's revocable trust, capital gains became a non-issue. (My mom inherited his entire trust.) Then she developed dementia and began needing 24/7 home care at the beginning of last year. Since withdrawals from tax-deferred IRAs are always taxable and my mom's medical deductions were going to far exceed the reduced survivor pension she was receiving, I realized I should tap her IRA first for money to cover the home care which exceeded her pension/SS. Even though I liquidated her IRA last year, my mom ended up owing zero income tax because of the large medical deduction.


My mom likely won't be owing any income tax anymore with her high medical deductions & reduced pension. Given that she's 96 and the current high stock valuations, I have been selling out of her stock funds to pay her expenses. I suppose any decision I make on what to sell can be considered "market timing", but I have to sell something on a continuous basis. My dad did a pretty good job investing their savings which was mostly amassed in retirement thanks to his long life--nearly 40 years in retirement, generous COLA'd pension and reduced expenses as they aged, and I haven't made any changes to the investments other than selling when necessary to pay expenses. A sizeable chunk is in a tax-free bond fund, which no longer makes sense. To be honest, I'm unsure about what to do with that given current stock valuations and rising interest rates. Suggestions anyone?

My mom, sibling, & I all jointly own her checking account. The amount in the checking account is minimal compared to the investment accounts which are all within my mom's revocable trust. That means we can all sign checks, which has been useful. A CPA/attorney relative suggested I arrange to open up a checking account within my mom's revocable trust. He said that would facilitate things after my mom dies (I'm the successor trustee).

Other than the jointly owned checking account, the only other asset which was not in my mom's revocable trust was her car. The car is still there, and I sometimes drive her to places in her car. She ceased driving about 3 years ago, and I had my mom sign papers to change the title of her car from her name to her trust's name. That way, her entire estate will be in her trust and probate can be avoided. Her home was already in her trust.

Another thing I did quite a few years ago, was get my parents an umbrella insurance policy. Since my mom is still living in her home and has caregivers 24/7, I think that makes sense.

 

[ExFlyBoy5]

Another thing I did quite a few years ago, was get my parents an umbrella insurance policy. Since my mom is still living in her home and has caregivers 24/7, I think that makes sense.

That is very smart. My Dad had suggested that maybe he didn't need his umbrella policy anymore since he wasn't driving, but since he still lives/owns his home, I reminded him that he could still be subject to liability if something happened to someone on his property. The odds of that happening are very, VERY remote, but his property is quite hilly and on a wooded lot...it could be an attractive area for kids to get injured on. It's worth the $100 or so bucks a year to mitigate that risk.

On the subject of his car, he still owns it (currently it's parked in my garage since I am now living with him as his caretaker) and he thinks that I will want it when he dies. I don't have the heart to tell him that I have no interest in his very large Lincoln, but I can't bring myself to sell it, either.

 

[48Fire]

I’m interested in hearing from those of you that have taken control of finances on behalf of a parent(s). What are the nuts and bolts? What are some tips?


Sample Questions

• What address do I use for service providers, banks, credit cards, etc. (parent’s or mine)?
• What are the considerations when I file taxes on their behalf?
• Did you set up a new credit card or account for any reason to help manage things?
• How have you kept siblings informed/updated?

I’m open to any advice and experience sharing you think would be helpful. Thanks!

I handled MIL finances for the past several years. She had dimentia, was in Assisted Living, and passed away in February.

1. Definitely use your address. You don't want some resident at Assisted Living facility finding mail, etc. It's just overall, much easier. That said, go paperless as much as possible.
2. No problems on filing taxes. I have done if for years using TurboTax. They walk you through it. As long as the IRS gets money, I am guessing they are happy.
3. We added extra credit cards on MIL existing account - one for my wife, SIL, and BIL. Anyone could have expenses, so this kept it clean. Since I reviewed monthly, I could see anything unusual.
4. I created a spreadsheet for all assets, and updated monthly. It included projected runout of funds. I sent it out with a brief summary. BIL never looked at it. SIL always had a question or two, but in the end, staying on top of items satisfied her.

We did set up a separate gmail account for MIL finances. This kept it clean from her previous email, which was cluttered with junk, and any of our personal emails. We changed all of her accounts to reflect the new email account.

Try to minimize accounts as much as possible. For example, if there are two bank accounts, consolidate to one. Any account or properties will need to be dealt with eventually.

Add Transfer on Death beneficiaries to everything you can. It's much simpler and faster upon distribution.

Good luck with everything

 

[Potstickers]

I was put on my mom's checking account and paid her bills online... I picked up her mail at her condo... but, she recently moved to memory care and I am still working through what I plan to do next...


Just signed her condo for a different electricity provider and put it in my name...


Have an old CC I was not using and am now using it to pay her expenses that are not through the memory care bill...


All other comments here are good and I am sure I will do some of them... so thanks for the question...

US Bank allowed me to be an authorized signer on my dad's account, with his permission. I was also able to have online access. This gave me everything I needed the capacity to do without they ownership. It is possible to set up a POD on the account, but we didn't (unfortunately) do that.