reagor Asked May 2011

My 91-year-old mother now needs help with financial issues and I am her power of attorney. How much financial independence is a good idea?

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My mother had a bad car accident in Dec. and my power of attorney was activated during an extended period when she was not lucid. Her checkbook and wallet were stolen during her illness and I managed to shut down all her accounts and prevent her losing any money. She is now mostly back to her old self but everyone (including her lawyer) tells me to keep the power of attorney active and take a more active hand in managing her financial affairs.I have been giving her cash and writing checks for her as needed. I am asking myself whether to set up a credit card and/or checking account for her. I would welcome others' experience.

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reagor May 2011
Thanks so much. I did check all three credit reports at once right after her wallet and checkbook were stolen. I put alerts on them, but not the freeze, which I understood to last seven years. I wasn't sure enough of what we were heading into to put the freeze on then. I can go back and do that now. I could ask her if she would prefer to pay her own bills or have me keep doing it, assuming we move forward with a joint checking account. For in-person business, I do think there are places that won't cash a check with just a gov't ID, so not having a credit card could be limiting even in cashing checks... I see what you mean about the risk, though.
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With a frozen credit file, no new lines of credit can be opened in her name, even if someone were to get all of the necessary information (SSN, DOB, etc.). In fact, even if your mother applied for a credit card, it would be turned away. Placing a credit freeze is 100% effective at stopping someone from stealing an identity and opening new credit lines.

That being said, it does not protect 100% against identity theft in general. For example, placing a credit freeze would not stop someone from stealing her bank account information (or her checkbook itself!) and commiting fraud that way. However, it is probably the single most effective, easiest, and cheapest (in most states, it is free) way to protect against the potentially most damaging form of ID theft. So, yes, your mother would be less vulnerable to ID theft by placing this freeze.

Also, since the January theft, have you checked her credit report? If not, here is my suggestion: under Federal law, you are entitled to one free check from each of the three credit bureaus each year. However, there is nothing that says you have to use them all up at once. I would get a copy from, say, Experian now, then in 3-4 months get one from TransUnion, and shortly before the end of the year, get one from Equifax. That, combined with placing a credit freeze, means you will never, ever, ever have to worry about someone having taken out a new credit card or some other kind of loan in your mother's name.

If you think your mom would like to have a checkbook again (a completely understandable desire!), my suggestion would be to figure out what her monthly spending is, and then transfer that amount into the account each month. That way, if someone were to steal her checkbook again -- or if an unscrupulous individual managed to con her out of money -- your loss would be limited to whatever money is in the account at that time, and possibly any returned check fees (I don't know how banks treat that). While still a pain, it significantly limits your potential loss.


Hope that helps!
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reagor May 2011
Thanks for the responses so far. My mom did have a head injury, but after a really scary period of decline, seems to have recovered fully. I think the change is that she realizes she needs to slow down (e.g. not driving) and seems grateful that I am taking on the burden of bill-paying, battling the car insurance companies and Medicare, etc. I do think she might like to have a checkbook again and it is a good idea to have a joint account with her, probably at the CU where her savings account is and where I have FI-to-FI set up with my bank. We have been 'settling' about once a month. It is very important to keep expenses separate, and it is sometimes challenging! I'm curious about the advice to freeze credit and not get a credit card for her. Is she less vulnerable to ID theft with just a checkbook and is that the reason behind the advice? Of course, I also need to get her a state ID to use either one, as that too was taken in the Jan. theft!
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Good morning, Reagor. My wife and I own a company that has helped seniors and their families manage their finances since 1985. This is a very, very common scenario. I recommend a couple of things:

1. I would not open a credit card account for your mother. In fact, I would go the opposite way and put a security freeze on her credit file. It is by far the easiest way to protect your mother from fraud and identity theft. If you're not familiar, a security freeze means that no new lines of credit can be opened in your mother's name. When you place the freeze, the credit bureaus will give you a PIN that you can use to temporarily "thaw" the credit file (say for a period of 2 weeks) if for whatever reason in the future you decide to get a new line of credit.

2. In our experience, it often works out better if you can help your mom keep as much control and decision-making authority as is practical -- with you providing a sharp eye and stepping in when needed. I think the suggestion that debmcd1256 gave above about sitting down on a regular basis and "helping" is spot on.

3. It probably is a good idea to set up a separate checking account for your mother, and you might want to consider making it a joint account. I would also suggest doing it at a bank that you already have an account with, if possible, just for ease and convenience. I think you will find that having a separate account makes it much easier for you to track the spending and transactions so that it won't be all mixed in with your own personal finances.

4. As I'm sure you've probably discovered, this can take a LOT of work and can become quite stressful for families. If you find it just becoming too much, I would suggest you visit the American Association of Daily Money Managers website (www.aadmm.com) and speak with a daily money manager in your area. Many people do not realize that there are professional services available to help with just this sort of thing. And, of course, I'm always happy to chat about it if you wanted to send me a private message.

Good luck -- it sounds like you're doing a great job!
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debmcd1256 May 2011
It sounds that you have your mother's best interest at heart and don't want to offend her with taking more control which is commendable but not necessarily wise. Monitoring her accounts, bill payment, taxes, financial decisions is needed. I think it is very hard for her to give it all up or say I can't do this anymore. Maybe a good approach is to sit down on a regular basis and "help". You are way ahead if she will let you in and this is a good saving face approach. Good luck!
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cmagnum May 2011
Being mostly back to her old self does not sound too good. What does her doctor think of her ability to handle her business in a business like manner? Did she sustain any head injury in the car accident? My not lucid do mean semi-conscious? How on top of things was she before the accident? My mother is a bit sharper than she was, but even at that she and my step-dad had not been having the CPA do their taxes since 2004 which they kept as a secret. When I got on top of this and finished solving the problem, I never gave my mother any control back. I think the definition of competency is far too narrow.
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