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Cash Care: Knowing When to Take Over a Loved One’s Finances

For senior citizens, it’s normal to reach a point where they’re no longer able to manage personal business and finances. In these circumstances, it can be necessary for loved ones to step in and help out, but knowing when to do so is not always clear. Here are a few scenarios from James Hunt Funeral Home to help you make your decision.

Physical Impairment

One of the clearest signs that your loved one may need help managing their funds is when they are no longer able to carry out Activities of Daily Living (ADL) independently. These are usually simple upkeep tasks, such as going to the bathroom or taking a shower. If they are physically impaired, they may be struggling with fading vision or late-stage Parkinson's, or they may simply be housebound, meaning they are no longer able to deposit checks or pay bills.

Assessing the Situation

The first step is to have an open and honest conversation with your loved one about their financial situation. Determine what bills need to be paid and when they are due. Take inventory of all assets and debts. This will give you a clear understanding of the overall financial picture.

Creating a Budget

Work with your loved one to create a monthly budget that covers all necessary expenses. Be sure to include any recurring bills such as rent/mortgage payments, utilities, insurance premiums, etc. Identify areas where expenses can be reduced without sacrificing quality of life.

Managing Investments

If your loved one has investments such as stocks or bonds, work with a financial advisor to manage them appropriately. Be sure to understand the risks involved and make informed decisions based on your loved one's goals and needs.

Cognitive Impairment

Things can be more complicated if your loved one is cognitively impaired, meaning they can no longer engage in instrumental activities of daily living. If your loved one struggles with dementia, for example, they may not be conscious of their decisions. Health crises in the elderly can escalate quickly, so it’s important to act quickly and speak to an attorney about intervention.

Establishing Legal Authority

In this instance, it’s wise to establish a durable power of attorney to ensure you have the legal authority to make decisions your loved one is unable to. This will give you legal authority to manage their finances if they become incapacitated or unable to make decisions on their own.

Next Steps

If your loved one is unable to manage their finances, there’s a good chance they’re also unable to live alone as they have done in the past. It may be necessary, in this instance, to discuss selling their home, thus ensuring a more comfortable way of life. To help with this, a home proceeds calculator can give you a rough idea of what you can expect to make off the sale. 

If they own a business, you may need to help them sell this, as well. There are a number of steps, including obtaining a preliminary valuation of their business. You’ll also need to gather important documents and get a full account of any remaining debts. From there, the steps could vary slightly, depending on what business structure they own.

Communication is Key

It’s important to keep the lines of communication open with your loved one throughout the process. It's important to respect their autonomy and independence while also ensuring that their financial needs are being met. In any of these scenarios, it’s important that you speak with them in a compassionate manner to see if they would like you to intervene. Taking over a loved one’s finances is never easy but with the right precautions, you can do right by them and ensure they are protected and comfortable at this crucial moment. 

James Hunt Funeral Home is here to help you deal with your loss. Call 732-775-8722.

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