Managing your own finances, can be a challenge. Managing someone else’s finances presents even greater challenges.
When that someone else is a parent, the scenario is entirely different. You and your parents share a unique relationship. Whether good or bad, you have a history. You were once under their care, and managing your parents’ finances may seem very much like a role reversal.
So, how do you handle caring for your parent’s money?
Start early – The best way to manage your parent’s money is to know how they want their funds handled. The best way to find out what your parent’s financial wishes are is to talk to them about finances before there is a problem. While your parent’s are still able to take care of their own finances, consider approaching them, and asking them what they would have you do if you were to one day need to manage their money.
Their money, their prerogative – While you may end up managing your parent’s finances, you need to realize it is still their money. Especially if you have clear guidance regarding their wishes, you need to follow their plans, not yours. If your parent’s are still lucid, you may make suggestions, but you must accept that ultimately, it is still their money.
Don’t expect a smooth transition – It is highly unlikely that your parents will be the one’s to initiate the transfer of management. After all, they took care of you, they are the parent; they should be able to take care of themselves. If the time does come that you must take over your parent’s finances, be prepared for some resistance.
Make it legal – Especially in the realm of finances, it is important to make everything legal. Power of attorney paperwork can grant you the right to legally perform financial business on your parent’s behalf.