Caregivers are commonly asked to handle their loved one’s finances at some point in time. Not only does this involve the current tasks of paying bills and balancing bank accounts, but also the planning and management of the person’s financial future. Since every situation is unique, there is no right way to handle someone’s finances. There are, however, simple tips that can help you effectively manage money and reduce crisis.
Open the Lines of Communication
Talking about money can be difficult, but you must have a good understanding of the complete financial picture. Focus on the benefits of planning out your loved one’s financial future, and offer suggestions that have worked for yourself or others in the past. Use “I” statements as opposed to “you” statements that can feel demeaning.
Assess the Current Financial Situation
It’s easy to be too relaxed or too overpowering in this situation, but you need to find a good balance, especially if your loved one is still able to have some control over their decisions. To understand the current situation, collect the following:
- Income sources: retirement benefits, disability benefits, pensions and Social Security
- Financial assets: cash, checking accounts, savings accounts, stocks, bonds, money market funds, mutual funds and IRAs
- Real estate: primary home, secondary home and investment properties
- Other assets: jewelry, automobiles, boats, precious gems/coins, collectibles, household items, inheritance
- Life insurance policy
Once all of these numbers are added up, you must subtract liabilities and debts such as mortgages, personal loans, credit cards and IOUs.
Get Legal Advice
Contact financial planners, bankers, lawyers, accountants or insurance agents for solid legal advice. Many offer free consultations that give you an opportunity to meet them and learn about how they can assist you in the future. Working with legal professionals keeps things honest and upfront – a bonus for avoiding family conflict – and will make you aware of all options available to your loved one.
Share Financial Responsibilities
All information needs to be shared with immediate family members, which will avoid problems or miscommunication in the future. Decide who will handle what roles and responsibilities, and look for ways to streamline things, such as by signing up for automatic bill pay. It’s also important to know your own potential liability, so be sure to talk to a financial advisor about what drawbacks you may have by signing a document or putting your name on a loan.