Managing Finances From Afar

digital age

 Get Out of Town: Managing Finances From Afar

Whether it’s a long-distance phone call, an email, or a tip from a friend, an increasing number of 50-Plus Americans are finding that they must help their out-of-town parents or older relatives manage their money.  The trend is becoming more and more common because people are simply living longer. In 1960, 24 percent of people in their 60s had one parent still living. That number has grown to 44 percent in the year 2000, nearly doubling 40 years later.

More than ever before, older generations are dependent on younger generations to solve their late-life financial issues because those issues are more complicated than they once were 20 years ago.  Even people with modest amounts of assets are faced with complex issues. The retirement accounts that provide income for the elderly, such as 401(k)s and individual retirement accounts (IRAs), all have different rules, which are confusing to most people.

Plan ahead if you can.

Helping older people manage their money is not an easy task. That’s why it’s best to discuss financial concerns with your relative before a crisis occurs.  Working together will benefit both of you by providing the appropriate information to help in making decisions in your relative’s best interest. After you gain consent, you will find that managing your loved one’s money is a daunting task.  It means receiving income on his or her behalf, paying bills, budgeting or even making investment decisions or withdrawals from an IRA.

However, sometimes, the real difficulty is recognizing that there is a problem, which can be especially difficult when you’re miles apart.  If possible, get to know your relative’s acquaintances or anybody that can tip you off that your loved one may be experiencing difficulties and may need help with his or her finances.  Verifying that your relative needs assistance is the first and easiest step. Depending on the physical and mental health of your loved one, assuming financial responsibility can present a psychological and financial challenge.

Whether you manage the money by yourself, or hire a helper who lives in the relative’s area, you must first find out about all the sources of your relative’s income, including Social Security, pensions, IRAs and other assets.  In finding the appropriate information, you may have to check with the relative’s accountant, lawyer, financial planner, broker or anyone else who might be familiar with their situation.

Taking the responsibility.

If you decide to take on the responsibility of managing your relative’s money, here are some suggestions to help with the process:

  1.   Make a budget based on the money available.
  2.   Set up a joint checking account.  Have copies of statements sent to you, as well as, your relative so that you can monitor both deposits and check writing.
  3.   Otherwise, open a joint cash management account.  Such accounts combine cash, stocks and other assets into one account with check writing and credit card services.  Also, have pensions, Social Security, IRA withdrawals and any other income deposited in the account, and arrange automatic payment for regular bills such as utilities or rent.
  4.   Work with the Social Security Administration, the Veterans Affairs Department or your relative’s pension plan to become a “representative payee” who is authorized to receive your relative’s monthly benefits or to have the money deposited in a joint account.
  5. Have legal documents like a Financial Power of Attorney in place. A DPOA is extremely important in the State of Wisconsin. If something happens and there is no financial POA in place, you will have to face the court system/ probate (and that is never cheap).
  6. Make sure all financial accounts have destinations attached to it like POA, payable on death, or beneficiary. This can easily be set up where you bank.

Prudent planning is the way to achieve financial success. Since we live in a digital era, it’s easier than ever to have online access to most accounts. Don’t let living out-of-state get in your way. Jumping in early to have an awareness of your loved ones financial situation will only come to benefit you in the future. Waiting until your parent is incapacitated or hospitalized will make it hard to track down all of their accounts and gain access to it. We suggest starting the conversations now, it will make the future easier on everyone.


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