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Deciding to take over the money

We struggle enough with determining whether it's time to take the car keys from our elderly parents.

Another tough decision that many families will have to grapple with is whether it's time to take the checkbook from Mom and Dad because of their cognitive decline.

While it's important to respect your parents and their dignity and independence, you also must be prepared to save them from themselves if they're engaging in financially damaging behavior. But approaching this situation can be difficult.

"The issue of safe finances, as compared with safe driving, needs to be handled just as carefully, with appropriate respect," said Sally Hurme, senior project manager for health education and outreach at AARP.

"Taking away the keys to somebody's car is a dramatic step that can seriously hinder their mobility and independence," she said. "Taking whatever steps to monitor or control in some way a parent's financial freedom is an equally or even more serious infringement on their independence and autonomy, self-esteem."

The ability to manage personal finances is part of a person's "executive function" -- the cognitive process that regulates a person's ability to organize thoughts and activities, prioritize tasks, manage time efficiently and make decisions.

"Executive function is that ability to make change, balance your checkbook, make reasonable decisions about the value of an item in the marketplace -- those general skills that adults acquire over time about how to manage their money and not be taken advantage of," Hurme said. "A decline in executive function certainly can result in increased vulnerability to exploitation."

Experts say to watch for these signs:

*Unpaid bills: "The utilities have been shut off, a tax lien has been imposed because property taxes have not been paid," Hurme said. "There might be piles of unpaid bills lying around the house."

Beverly Flach, a case manager at the Senior Source guardianship program in Dallas, said she entered her elderly mother's apartment one day and found something unusual.

"She had all of this paperwork piled on chairs, floors, on the table," Flach said. "She was there running her fingers through her hair and was very upset."

Flach said when she asked what was wrong, her mother said, "I can't figure out what I owe and what I've paid."

"She wasn't accurately able to read the bill that says, 'This is how much I owe,' " Flach said. "Some bills she was overpaying, and she was behind in some."

She and her mother worked together to straighten out the finances and her mother "asked me to take her checkbook and said, 'You take care of the bills,' " Flach said.

Her job was made easier because her mother, who died in 2006, gave her financial and medical powers of attorney "years before she started to decline," Flach said.

A power of attorney is a legal document your parents sign to give you the authority to handle their financial or medical matters if they become incapacitated.

*Frequent calls from strangers: "You want to spend time with them and see how much the phone is ringing," said Suzanne Cobb, director of the guardianship and money management program at the Senior Source. "If the telephone is ringing frequently, it could be a sign that scammers are calling."

*A sudden new "friend": You want to watch to see if suddenly "there's a new person in their life who seems to have extraordinary interest in their finances," Hurme said.

"The twin sister of this is this newfound friend is in some way cutting them off from their ordinary sources of social support, putting them in isolation, putting themselves in as the significant influencer, cutting them off from the other social influencers so they become the sole influencer."

*Unusual spending habits: "If your parents have always been financially responsible and spent their money wisely, and all of a sudden a new car shows up in the driveway, if there's a noticeable difference in how they are spending their money, it could be a sign that you need to investigate further," Cobb said.