Jon Beyrer, CFP, EA
The job of caring for elder relatives often includes helping them with their finances in some fashion, from checking that the utility bills get paid or the tax returns get filed, to taking over the financial management completely. As important as it is to make sure the lights stay on, you may meet some degree of resistance when you try to help with the finances. For many elders, being able to take care of their own finances is an important symbol of independence and self-worth. Consequently, they may hold on to the checkbook like it’s a life preserver in stormy seas.
For many caregivers, the resistance you get and the feeling that you are invading your relative’s privacy may leave you less than completely aware of your elder’s finances. You may not know where the important information is, what bills need to be paid, or if there are important deadlines that need to be kept. If you wait until the elder becomes incapacitated to broach the subject of paperwork, the elder won't be of much help, and locating important documents can be a much more difficult process.
To avoid such a circumstance, you should make sure that you or another family member knows where to find personal documents, such as income tax returns, powers of attorney, wills and living wills, health and life insurance policies. In addition, a family member should be familiar with the elder's financial resources and obligations, including bank accounts, pension plan, annuities, investments, and real estate. Organizing this information in advance can save time and frustration later.
A List for Emergencies
A good place to start is to create a list of the important information you would need to know in case of an emergency. Your elder may want to keep such a list in her possession but tell you where to find it, or she may prefer to give it to you. She may also prefer to keep certain information with a trusted third party such as an attorney or accountant.
The list might be a simple description of where to find important documents. For example, the elder might write, "There's a gray metal file box in my closet that contains my safe deposit box key, my insurance policies, the deed for my home, and a listing of stock certificates. My checkbook and current bills are located in the top left desk drawer. My attorney John Johnson has copies of my will, living, and trust agreements, and my accountant Mike McMichael has copies of my income tax returns." Your elder also may want to include a list of friends and relatives who should be contacted in a serious emergency or upon her death.
List of Important Documents and Information
Documents:
- Wills
- Trusts
- Durable Powers of Attorney
- Advance Health Care Directive (Living Will)
- Insurance or annuity contracts
- House deed and mortgage note
- Title to auto or other property
- Health Insurance benefits statement and ID#
- Asset statements
Information:
- Important contacts: advisors, care representatives, etc.
- Medical information
- Bills and due dates
- Mortgage and other loans
- Utilities
- Insurance premiums
- Credit cards
- Property taxes
- Tax returns, estimated tax coupons, and due dates
- Social Security Benefits
- Pension or annuity benefits
Organizing Information
Here are some strategies to help your elder organize and manage financial information:
Use a filing system
If your elder has a good system for keeping her bills in order, ask her to show it to you so you are familiar with it. If she doesn’t already have one, you can create a computer-based system using a program such as Quicken, or you can create a simple paper filing system. For a paper system, you can use a large, collapsible manila file, label a set of manila folders from A to Z, then place them in the file. When a bill is paid, the statement can be filed in the appropriate folder, such as "E" for electricity, and "T" for telephone. At the end of each month or at the end of the year, it will be much easier to match these statements with your elder's checkbook. Ask her to keep her canceled checks and monthly checking account statements in the filing system. These are necessary to track direct deposits and some income tax deductions, such as charitable contributions or medical expenses.
Do an Annual Review
At the end of the year, help your elder make a list of all investments and sources of income: pension funds, stocks, bonds, annuities, rental property, etc. Each of these will generate financial information that must be reported on state and federal income tax forms. If you have a master list that is updated at the end of each year, you'll know what to look for the following year.
Keep Track of Deadlines
Set up a "tickler file" to remind your elder when a tax deadline or other important deadline is approaching. April 15 is the deadline for federal income taxes, but many seniors also must pay quarterly estimated taxes, which are due on April 15, June 15, September 15, and January 15. Ask your elder for a copy of their estimate tax coupons or a duplicate of Declaration of Estimated Tax.
If Your Relative Refuses Your Help
If the elder refuses your efforts to help, you may want to ask her to sit down with you once a month to review her bills, just so you can become familiar with the routine in case you need to do it for her one day. Even better, you can offer to enter the information in a computer-based system and review the summary printouts with her. Many utility companies will allow you to be listed as an emergency contact if the bill has gone so far past due that the service is in danger of being discontinued. Many institutions will allow your relative to request that you receive duplicate statements or that you be allowed to access information about your relative’s account.
Although helping your elder manage their financial information may be a lot of work, it may be necessary to protect her from costly mistakes or from those people that might take advantage of her. And having a handle on her affairs today will make things a lot easier for you or other family members when she’s no longer able to explain things to you or help you find important documents.
Jon P. Beyrer, EA, CFP® is the Vice President of Financial Planning at Blankinship & Foster, LLC, a Registered Investment Advisor in Solana Beach, California. Mr. Beyrer earned his Master of Science Degree in Financial and Tax Planning from San Diego State University. He is licensed to use the Certified Financial Planner and CFP® marks by the Certified Financial Planner Board of Standards, and is enrolled to practice before the Internal Revenue Service. Beyrer is a member of the Financial Planning Association and currently serves as the association's Public Relations Director. He is also a member of the La Jolla Estate Planning, Trust and Probate Section and the National Association of Personal Financial Advisors.