If you have aging parents, you might have come to the realization that they need assistance with managing their finances. This could be due to health issues, cognitive decline, or simply the complexities of modern financial systems. Taking over the management of your parents’ finances is a significant responsibility and can be both emotionally and practically challenging. Here are some tips that will help you approach the task with care, organization, and sensitivity.

• Understand the situation. Before you dive into managing your parents’ finances, start by gathering bank statements, investment records, insurance policies, wills, and any outstanding debts. It’s crucial to understand their income sources, expenses, and financial obligations. Discuss their goals and expectations, and ensure you have their consent to manage their finances.
• Organize financial records. Create a binder or digital folder for easy access and keep it updated. Categorize documents into sections such as banking, investments, bills, and legal documents. Consider using financial management software to help track income, expenses, and investments.
• Develop a budget that reflects your parents’ income and expenses. This budget should cover all their basic needs, including housing, utilities, groceries, medical expenses, and insurance premiums. Be sure to account for any irregular or unexpected costs, such as home repairs or medical emergencies. Monitor their spending regularly to ensure that the budget is being followed. Look for opportunities to reduce costs without compromising their quality of life.
• Review their investment portfolio and savings. If your parents are nearing retirement or are already retired, their investment strategy might need to be evaluated or adjusted to ensure a steady income. Consult with a financial advisor if you’re unsure about managing investments or need professional advice.
• Consider legal matters. Ensure that their estate planning documents, such as wills and powers of attorney, are up to date. These documents will guide you in making decisions and managing their assets according to their wishes. Corporate fiduciaries can step in to serve as power of attorney if the demand is too much or if you don’t live near your parents.
• Be aware of taxes. Stay on top of tax obligations to avoid penalties or legal issues. This might involve filing tax returns on your parents’ behalf and ensuring they take advantage of any applicable deductions or credits.

Managing a loved one’s finances can be emotionally taxing. It’s important to balance empathy with practicality. If possible, involve them in the decision-making process to maintain their dignity and autonomy. Seek support if you find the emotional or practical aspects overwhelming. Financial counselors, eldercare advisors, or support groups can offer valuable guidance and relief.

This article was drafted with the aid of AI. Additional content, edits for accuracy, and industry expertise by Alyssa Proctor, wealth advisor for F&M Trust.