I am called upon frequently to assist my clients with overseeing a parent’s finances as the parent grows older. In some instances, it is the parent’s unwillingness to handle their own finances, or in other cases it is due to an illness such as Dementia or Alzheimer’s.  Some parents have even been a victim of fraud or schemes targeted at vulnerable or older adults. 

The following are general action items to consider when monitoring or moving to take control of a parent’s finances. These action items can be implemented as an integrated solution or they can be implemented separately. (Total control of a parent’s financial estate through guardianship is available however it entails a court hearing, medical testimony as well as a determination of incompetency.)

Step 1: Restrict Solicitations

1. Place parent on state and federal “Do Not Call” lists.
2. Place parent onto lists restricting certain direct mail solicitations, such as the Direct Marketing Association List
3. Review present solicitations being received by e-mail or by letter and write to the originator of the solicitation to cease communication.
4. Change parent phone number or email address to gain greater control over the people who can reach your parent.
5. Identify individuals, family or non-family members requesting funds and implement a person-specific plan to address those solicitations.
6. Develop a gifting plan with your parent. Therefore he/she may be better able to refuse gifting or donating to other causes outside of the established plan.

Step 2: Gather Information

1.  Identify parent’s assets including the location and titling of the accounts.  These accounts would include bank accounts, brokerage accounts, retirement accounts and any other type of asset holding.
2. Identify income sources and typical expenses.
3. Identify the parent’s credit cards.
4. Secure copies of account statements from banks, financial institutions, insurance companies, credit card companies, etc.
5. Secure tax returns for the past few years (again, these documents provide information on assets, liabilities, income and expenses).
6. Request parent to authorize others to discuss finances and information with his/her accountant, financial advisor, insurance broker, attorney and/or other professionals.   Conduct meetings to augment information.  This authorization may take the form of a Power of Attorney.
7. Secure credit reports from the credit reporting agencies.
8. Secure any information relating to outstanding loans. You may find this information on a Net Worth statement.

Step 3: Monitor Information

1.  Secure a general power of attorney (POA) and/or a specific.
2. Analyze the best method for receiving and monitoring information (e.g., POA or added to account statements).
3. Consolidate of accounts, credit cards and take other actions to reduce and simplify the number of items that needs to be reviewed and directed.
4. Establish online access to the accounts.
5. Establish automatic deposit for accounts and automatic bill paying, when possible, to ease the administration issues concerning receipt of income and payment of expenses.  Also, this increases the ability not only to monitor these issues, but to actually participate in the activity such as paying bills online.
6. Subscribe to a service that monitors identity theft (e.g., Lifelock).

Step 4: Establish Active Management of Your Finances

If your parent decides that active assistance is a better option – we at Baratta, Russell & Baratta can implement an active management of your accounts.  Active management may take many forms, such as:

1. Set up a trust –The parent could be the Grantors of the trust as well as the Beneficiaries of the trust; one can name the kids, or another trusted individual or a trust company, to manage the trust assets.  This is a preferable vehicle if there is a preference for a longer term management and typically affords the Trustee a great deal of discretion for active management.
2. Establish a Power of Attorney (POA) – Less imposing than a trust arrangement, a POA provides specific, written authorization for a child or another individual to act as agent for the parent.  A POA can also provide specific authorizations for unique circumstances.
3. Hire an outside firm, such a fiduciary service to perform all or some of the monitoring and management functions.
4. Perform a comprehensive review of your parent’s estate planning documents.  This is critical because it provides a window into your donative intent as to family and others.  The Planning can be available and transparent to the family (if a parent so permits).
5. Perform a comprehensive review of your parent’s financial investments.
6. Set up automatic deposits and automatic withdraws for income and expenses for the parent.
7. Create Transparency- transparency of your parent’s financial situation and the financial decisions of the family is critical to assure each family member that their parents’ matters are being handled capably and professionally.
   1.   Hold a quarterly accounting which allows each family member to scrutinize the parents’ transactions. In addition decisions can be made to remove those placed in a fiduciary position who has not abided by the obligations that were established.
   2. Set up meetings (annually at a minimum, or more frequently depending on the situation) to review the investment performance of any assets.

Step 5: Miscellaneous Issues to Consider

1. Perform Medicaid planning, before the need for those services (at which time it is impossible to do the majority of the planning).
2. Determine your parent’s eligibility for any additional government benefits.
3. Aggressively report any potential fraud to the District Attorney office that has jurisdiction of the matter.
4. Move to recover sums improperly spent, whether by contract or lawsuit.

Baratta, Russell & Baratta (BRB) has extensive experience in establishing and providing fiduciary services to estates, trusts or individuals.  We are well versed in all of the legal documents, planning and recourse necessary to successfully implement any estate planning and/or administration you and your parent would need.