• As people age, they may find themselves less engaged in their finances, or struggle with their taxes.
• It can be hard to have a conversation about taking over your parent’s finances, but it’s often necessary.
• Start the conversation early, and remember that your parent deserves autonomy while avoiding risk.

When my sister and I moved our parents from the apartment they’d lived in for 40 years into senior living, we discovered that my mom’s memory was going. She had been in charge of their finances, and my father didn’t have a clue how to do it, so we stepped in to make sure their bills were paid and their accounts were in order.

The moment when parents or older family members can no longer manage their finances isn’t always so clear-cut. I spoke with Cheri Stein, a partner and senior trust officer at Plante Moran. Stein is a CPA, CFP, and CIMA — certified investment management analyst. In her work with older clients, she’s learned the signs that someone might be losing their grip on their finances and ways that family can help.

1. Detachment from financial habits

“One of the things I often notice as people are aging is they just become less engaged in their former financial habits,” Stein said. When someone who used to ask lots of questions about their investment accounts no longer seems interested, or they have stacks of unopened statements, it might be time to intervene.

If the older person works regularly with a financial advisor, you could also ask the advisor if they have noticed changes that are cause for concern. Don’t be afraid to ask your parents directly questions about money. Your assistance could be the thing that saves their retirement savings from fraud or reckless spending.

2. Struggling to get tax information together

Stein flagged taxes as a potential problem area. One of the first signs a friend with early-onset dementia was having cognitive difficulties was when she couldn’t figure out how to fill out her tax return.

If your parent can’t pull together the information they need for their tax return, ask if they’d like a hand getting their documents together. If they’re willing to let you help, it could give you a window into how well they’re managing their financial life.

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3. Falling prey to scams

“The other big thing that’s very common these days is financial fraud,” Stein said. Her father had to take away her mother’s credit card because she kept falling for schemes on Facebook.

While anyone can fall prey to a phishing scam, repeatedly compromising accounts and not using good judgment online are signs that a senior may need greater safeguards against identity theft. Stein suggests offering training to vulnerable seniors. “Information about cybersecurity is going to go a long way,” she said.

In some cases, like Stein’s mom, it may be necessary to restrict the person’s access to their accounts to keep online fraudsters from taking advantage of them.

Tips for helping older family members with finances

Taking on the management of a parent’s finances isn’t an easy decision. All family members must trust the person with access to the accounts — assistance must not become an avenue for fraud. And the senior needs to be willing to accept the help.

“There’s a lot of dignity in being able to take care of things for yourself as opposed to giving up control,” Stein said. She tries to give clients a way to feel in control while protecting them from mistakes. Here are some tips to ease the transition.

• Start early. “Anything that you can change or establish early on is less of a transition,” Stein said. Don’t wait for disaster to strike. Be alert to signs that your parents might be struggling and start a conversation protecting their finances.
• Find the balance between risk and autonomy. “There’s a lot of dignity in being able to take care of things for yourself as opposed to giving up control,” Stein said. Find ways to give your parents a role while creating boundaries around spending. For example, one of Stein’s clients struggled to track the cumulative effect of his charitable donations. She helped him set up an annual plan for charitable giving that allowed him to be generous without endangering his financial security.
• Don’t shy away from difficult conversations. Stein noted that the hard conversations may help the most in the long run. You might make your parents mad, but saving them from financial ruin is worth it. “The worst-case scenario,” Stein said, “is the parent runs out of money and can’t care for themselves.” No one wants that to happen.