Getting Control of Your Elderly Parents’ Finances: Power of Attorney, Budgeting and Online Banking Tools

Introduction

As our elderly parents age, it can often become necessary for us to manage their finances on their behalf. This can be an overwhelming responsibility, especially when we don’t know where to start. To begin, it’s important to understand the concept of power of attorney and how it applies to managing elderly parents’ finances.

Definition of Power of Attorney

Power of attorney is a legal document that allows someone to act on another person’s behalf in matters related to their finances. It is typically granted by an elderly parent to a trusted family member or friend who can then make decisions regarding their financial affairs. In most cases, this document is used when an elderly parent is no longer able to make these decisions on their own due to age or illness.

Overview of the Problem

When taking control of an elderly parent’s finances, there are several steps that need to be taken in order to ensure that their money is being managed responsibly. These steps include establishing a power of attorney, setting up automatic payments, creating a budget, monitoring bank and credit card activity, and utilizing online banking tools. Taking control of your elderly parents’ finances can be a challenging but rewarding process that will help ensure their financial security and peace of mind.

Establish a Power of Attorney

The first step in taking control of your elderly parents’ finances is to establish a power of attorney. This is a legal document that grants someone else the right to make decisions on their behalf. It is important to understand the roles and responsibilities associated with having power of attorney before proceeding.

Understand the Roles and Responsibilities of Power of Attorney

When someone has power of attorney, they are responsible for making decisions about their elderly parent’s finances. This includes paying bills, filing taxes, and making investments. They also have the authority to access bank accounts, sell property, and handle other financial matters. It is important to understand that having power of attorney does not give someone access to any of their elderly parent’s personal information.

Consider Options for Setting up Power of Attorney

When setting up a power of attorney, there are several options to consider. The most common type of power of attorney is durable, which means that it remains in effect even if the elderly parent becomes incapacitated or unable to make decisions on their own. There is also limited power of attorney, which is only valid for a specific period of time or purpose. Lastly, there is springing power of attorney, which takes effect only after certain conditions are met.

Seek Legal Advice

It is important to seek legal advice when setting up a power of attorney. An attorney can help ensure that the document is properly drafted and legally binding. They can also provide guidance on the best type of power of attorney for the situation.

Set up Automatic Payments

Once a power of attorney is established, the next step is to set up automatic payments for bills and other expenses. This will help ensure that all bills are paid on time and will reduce the amount of time spent managing finances.

Create Direct Deposits or Automatic Bill Pay

The first step in setting up automatic payments is to create direct deposits or automatic bill pay. This will allow payments to be made directly from the elderly parent’s bank account or credit card. It is important to make sure that all payments are set up correctly so that they are processed on time.

Choose Appropriate Payment Methods

When setting up automatic payments, it is important to choose the appropriate payment method. This may include checks, debit cards, or online transfers. It is also important to make sure that the payment methods chosen are secure and reliable.

Monitor Automatic Payments Regularly

It is important to monitor automatic payments regularly to make sure that they are being processed correctly. This includes checking bank statements and credit reports for any discrepancies. It is also important to make sure that the payment amounts are accurate and that the payments are being made on time.

Create a Budget

Creating a budget is an important step in taking control of your elderly parents’ finances. A budget helps to identify sources of income, track expenses, and make adjustments as needed. It also helps to ensure that all bills are paid on time and that there is enough money left over for other needs.

Identify Sources of Income

The first step in creating a budget is to identify all sources of income. This may include Social Security, pensions, investments, and other sources. It is important to make sure that all income sources are accounted for in order to have an accurate picture of the total available funds.

Track Expenses

The next step is to track all expenses. This includes both fixed and variable expenses such as rent, utilities, food, and entertainment. It is important to keep track of all expenses in order to have an accurate picture of spending habits.

Make Adjustments as Needed

Once all expenses have been tracked, it is important to make any necessary adjustments. This may include cutting back on unnecessary expenses or finding ways to save more money. It is also important to make sure that all bills are being paid on time and that there is enough money left over for other needs.

Monitor Bank and Credit Card Activity

In addition to creating a budget, it is also important to monitor bank and credit card activity. This includes reviewing bank statements, checking credit reports, and looking out for any unusual activity. It is important to keep an eye out for any fraudulent activity or suspicious transactions.

Review Bank Statements

The first step in monitoring bank activity is to review bank statements regularly. This includes looking for any unexpected charges or withdrawals. It is also important to check for any errors or discrepancies.

Check Credit Reports

It is also important to check credit reports regularly. This includes looking for any changes in credit history or new accounts. It is also important to make sure that all debts are being paid in full and on time.

Look Out for Unusual Activity

Finally, it is important to look out for any unusual activity. This includes large purchases, unexpected withdrawals, or sudden changes in spending habits. It is also important to report any suspicious activity to the proper authorities.

Use Online Banking Tools

Online banking tools can also be used to take control of your elderly parents’ finances. These tools can help streamline the process of managing finances and provide additional security features.

Utilize Online Banking Platforms

The first step is to utilize online banking platforms. This includes setting up electronic payments, transferring funds, and viewing account balances. Many banks also offer additional features such as budgeting tools and fraud protection.

Take Advantage of Money Management Apps

Money management apps can also be used to manage finances. These apps can help track spending, create budgets, and receive notifications when bills are due. Many of these apps are free and can be accessed from anywhere.

Explore Other Security Features

Finally, it is important to explore other security features such as two-factor authentication and encryption. These features can help protect personal information and reduce the risk of fraud.

Conclusion

Taking control of your elderly parents’ finances can be a daunting task. However, by following the steps outlined above, you can ensure that their finances are managed responsibly. Establishing a power of attorney, setting up automatic payments, creating a budget, monitoring bank and credit card activity, and utilizing online banking tools can help ensure their financial security and peace of mind.