Financial Protection for Your Elderly Parent

This story opens with a 103-year-old parent who was sold two new HVAC units for his home costing $24,000.  These were top-of-the-line units where competitive units would have cost $14,000.  When his 70-year-old son found out, he was furious and felt the company had taken advantage of him.  The son had tried to protect his father by taking away credit cards but, in this case, the father took out a 12-year loan.  Ultimately, this case was resolved through a settlement agreement but this is a storyline that repeats itself every day across America.

I have my own experiences.  My mother, who died of Alzheimer’s, went through what I call the ‘Home Shopping Network phase’…where she was competent enough to order faux jewelry from the TV but obviously was not going anywhere where she would wear it.  After her death at age 89, we had a pile of jewelry and it was impossible to tell, for sure, what was real and what was fake.  A jeweler friend came to my rescue by dividing it into two piles…real and fake.

My father, who passed away at age 99, was a staunch patriot and was on numerous mailing lists, each of whom touted a patriotic cause focused on saving our soon-to-be-destroyed country.  He was constantly sending them money, which meant he got on even more lists.  Eventually, I took over control of his finances and he’d bring me his requests for gifts to various groups…many of which turned out to be bogus organizations and (legal) scams.

If our parents live long enough, most of us will face these issues.  I was fortunate that my father both realized he needed help and trusted me to look out for him.  I moved his financial assets into a trust where I served as trustee.  I simplified his finances by setting most of his bill-paying on auto-draft and consolidated his finances into two accounts, a checking and investment account.  We linked the accounts so I could easily transfer funds as needed.

When Should You Step In?

First, everyone, especially elderly parents, need to have an up-to-date financial Power of Attorney as well as a Living Will.  The person they nominate as their agent should be someone who is competent.  In too many cases, we find out it’s a deceased or incompetent spouse.  The next sign post is when you notice signs of diminished mental capacity.  We all suffer occasional ‘mental lapses’ but you’ll know when it becomes something more.  When you know it’s time, here’s what you should consider doing:

• General and Durable Power of Attorney. If you don’t have this, get this document in place before your parent is too incompetent to sign one.  This gives you the right to intervene on all financial matters.  Do the same thing with a Living Will which gives you the right to receive information about their health condition and intervene with the healthcare decisions.

• Bank accounts. Add your name to their bank accounts and set up online access for monitoring.  Most banks allow you to set up alerts if checks are drawn over a certain amount.  If their diminished capacity is severe enough, you’ll want to close their current account and open a new one where you’ll pay all the bills.
• Credit cards. You’ll either want to close credit card accounts or set up a system allowing you to monitor charges.  Again, most companies allow alerts for charges over a certain amount.  Mine alerts me anytime a charge of $20 or more is processed.  Don’t just cut up credit cards, close them.

Credit freeze.  This could be your most important step.  In our case example of the 103-year-old, he didn’t have access to credit cards or a checking account so he simply took out a loan!  With a credit freeze, the third-party lender could not get a credit report which is typically a requirement for a loan.  You’ll need to contact all three credit bureaus: Experian, TransUnion and Equifax.