Caring for an elderly parent can be physically, emotionally, and mentally challenging. Becoming a caregiver to a parent is a role reversal, even if you're just attending to his or her health. If you have to take over a parent's finances, too, it can be overwhelming.
These five steps can make it easier for you to help your parents manage their money.
Open the lines of communication.
The most important, and often overlooked, aspect of helping a parent with money is being able to communicate with them. Unless their mental capacities have lapsed, discuss everything related to their finances with your parents before you make any decisions or changes.
It's their money, after all, so include them in decisions regarding what to do wit hit. Make sure they understand that you you want to help them rather than take away their independence, and then keep them informed by telling them what you are doing with the monies as you are doing it.
Also communicate with other family members. Even if one sibling is the primary healthcare provider while another is handling the finances, all siblings need to stay in the loop — especially those who are not local or involved in the day-to-day management of your parents’ lives.
Sit down with all interested parties to determine the following:
What level of care needs to be provided, and how much your parents can afford.
Who will provide the care, and where. If you bring in an outside caregiver, select one famly member to be the point person for the caregiver.
Where the money for the care will come from, and who will control it. Again, you need one person to pay your parents' day-to-day bills and manage their assets.
Establish a durable power of attorney.
A durable power of attorney allows you or another trusted person to act on your parent’s behalf. This simple legal document allows this “advocate” to make financial decisions for your parents if they become unable to do so, on their own.
Those suffering from dementia or senility, who are no longer competent to make their own decisions, still have finances to manage. Having power of attorney over your parents allows you to write their checks, pay their bills, change their investments, and attend to other financial matters. This legal document needs to be created before a parent becomes incapacitated.
Opt for safe investments.
When handling an elderly parent’s finances, the first word is safety. A 70- and 80-year-old should not have half her net worth in one stock, even if she's owned it for 50 years and feels obligated to keep it.. The last thing you want is for this one stock to go south, and suddenly you don't have the money to pay for your parent's care. Loyalty is not returned in the financial markets.
Keep your parent's portfolio conservative. Its majority should be made up of Treasury bills, notes and bonds, bank CDs, and money market accounts. Accessibility and safety are paramount during this stage of life.
Put a will, a living will, and a healthcare proxy in place.
Ensuring that your parent has these three legal documents can avoid giant hassles later. Each has a very specific purpose.
Will: A legal document that allows an individual to state who should inherit his or her property.
Living will: A legal document that makes a person's healthcare wishes known in the event she or he becomes incapacitated. The living will usually focus on life-prolonging medical treatments.
Healthcare Proxy: A document that appoints an advocate to make healthcare decisions for a person that are not detailed in a living will, in the event that he or she is incapable of doing so.
Execute your plan.
Coordinating a plan of this magnitude is not easy — many things that are worthwhile aren’t. But once it is coordinated, you need to make it happen. It is not uncommon to put together a fantastic plan only to delay its execution. This procrastination often leads to regret down the road.
Set a date for when you plan to accomplish each task and stick to your deadlines. This will give you the motivation you need to work your plan.
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Source:http://www.dummies.com/how-to/content/helping-elderly-parents-with-their-finances.html
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