How to Help Aging Family Members with Banking

Estimated read time: 4 minutes

By the time you finish reading this paragraph another American will have Alzheimer's disease. According to the Alzheimer's Association, someone in the United States develops the disease every 65 seconds. Research indicates that the ability to make financial decisions is one of the first skills to decline in people who start to suffer from cognitive impairment.

Many older adults, therefore, must rely on a family member for their banking needs. This is not only to ensure bills are paid but also for protection. Seniors are prized targets for financial fraud and often get scammed. A Consumer's Digest study estimated that annually in the U.S. there are around 5 million cases of financial fraud committed against seniors.

However, older adults can be reluctant to ask for help, and family members just don't know how. Here are some tips for helping an aging loved one manage their finances.

Research All Relevant Accounts and Transactions

To get started, compile a list of all relevant banking and other financial accounts owned by your aging family member. Hopefully they have kept a record of everything in a safe yet convenient location to make the process easier.

If not, look through that person's mail for any delivered bank, credit card, and investment account statements. Another potential source for information is their most recent income tax return. It can help you locate all accounts in which they earned interest, dividends, or capital gains income. If you know they have worked with an accountant, financial adviser, or some other financial professionals, contact those individuals to assist you. They can be the ideal resource for determining what accounts and assets your family member owns.

Once you identify those accounts, review the history of transactions in each one. You can then find out what bills are paid each month. More importantly, you'll be able to get a sense of what recurring payments are normal and what is out of the ordinary. It can also help you uncover any outstanding debts. Lastly, go over these transactions with your family member as best you can to ensure they are legitimate and to evaluate if any are payments for products or services they no longer need.

Be a Good Record Keeper

It's important to remember that as your aging family member's cognition declines, you can't expect them to help you keep track of all the financial moves you make on their behalf. Therefore, every bill you pay and every dollar you transfer or withdraw for them needs to be appropriately recorded. With a close eye on everything going on in their accounts, you'll be better able to successfully prevent them from making financial mistakes or becoming a victim of financial fraud.

But there is another, perhaps even more essential, reason for you be a good record keeper. That is to protect yourself. Taking responsibility for another person's finances is a very delicate situation. Even though you are family, you don't want to risk finding yourself in legal trouble should something go wrong. A clear, documented record of everything you have done and they have authorized you to do can help protect you from any allegations you've taken advantage of your position as a caregiver.

Ask Important Questions

Ideally, you should gather as much information about their finances as you can before they are entirely unable to manage their finances on their own. If you are fortunate enough to be in that position, here some the important questions to ask.

Where do you keep your financial records?

This pertains to the step we discussed above. To be able to even start to help, it's imperative to know what assets they own and where they are located.

What bank(s) do you use, and what are your bank account numbers?

In order to gain access, you are going to need to know specific information about their accounts. You may also need to ask for their username and passwords.

What are your sources of income, and how much?

Take stock of all the money they have coming in each month and from where. Are they still working? Have they started to receive Social Security? What about a pension? Do they take monthly withdrawals from their investment accounts?

What are your monthly expenses?

To help keep them current, you're of course going to have to know what needs to be paid.

How do you pay your bills?

It is also important to know what bills, if any, are automatically deducted from their bank account or if they typically pay online or with a check.

Have you designated a durable financial power of attorney?

Designation as their financial power of attorney gives you the legal right to access their accounts and act on their behalf, either immediately or upon their incapacity.

Protect Your Family

This leads us to steps that allow you to legally protect your family's money.

One option is to encourage your aging family to create a revocable or irrevocable trust, under the guidance of a financial adviser or estate planning attorney. A trust spells out a person's wishes for how their money is to be distributed when they are living and when they become incapacitated or pass away. It names a trustee who is in charge of the assets in the trust. As the trustee, you're the overseer of that person's money and will know when any unusual activities occur, such as a request to transfer a balance or sign over assets to a person or organization you do not recognize.

Another step you can take, and which is a standard practice of estate planning, is to have the family member you're helping name you or another trusted individual as their durable financial power of attorney. A durable financial power of attorney gives someone the legal authority to make financial decisions for someone who is unable to. That includes everything from paying their bills to managing their investments. It also helps families avoid the difficult and costly probate court process to sort out a family member's financial affairs.

Helping an aging adult with their banking and other financial needs is a common responsibility for caregivers. It should be done with the utmost care and planning, not only to protect that person but also yourself and your family. As people age, they unfortunately become targets for scammers and fraudsters. But with someone like you at their side, their assets will be in good hands.