The Biggest Challenges of Helping with a Loved One’s Finances

Sometimes, when someone grows older, it becomes necessary to step in and help them with their financial life. Paying bills, managing Social Security income, and making sure that investments and retirement accounts are well maintained can suddenly become an overwhelming task, even if this was something that once came easily to one of your loved ones. As a loving and caring family member, you are well intentioned when it comes to helping your parent or grandparent take care of their finances, but it’s not always so cut and dried. There are a lot of legal pitfalls here, and it’s important to be aware of them before you get started.

 

That’s why I’ve compiled three of the biggest challenges that you will encounter when it comes to helping out with a loved one’s finances. These are not the only hurdles you will face, but they are some of the biggest.

 

Helping a loved one with their finances can be overwhelmingly tough. These are some of the biggest issues you will likely face.

 

1. No preparation has been made before hand. If your mom or dad hasn’t ever taken into account that they might not be able to care for their own finances someday, some obstacles will immediately arise. This is common because most people don’t ever think that they will need to plan their estate soon. However, if there’s not a durable power of attorney in place, stepping in to help your loved one may actually be detrimental. Taking care of this sooner rather than later will help to avoid a legal battle over who can help your parent, and who cannot.
2. Social Security and other benefits are tricky to navigate. For specific retirement benefits, it’s important that your loved one has named a designated beneficiary and a representative. Legally, these organizations cannot give you any information or access to your loved one’s account unless you are given express permission to do so. Establishing this early is important so that if something does happen, you can make phone calls and communicate with the organizations on your loved one’s behalf. If you want to help someone, you need to make sure that the proper steps have been taken so that you can have access to do so.
3. Your parent’s finances are a mess. This is going to be the most common problem faced. Disorganized finances are very common, especially if your loved one has been in need of assistance for a while. It’s very easy to let things pile up because money is often out of sight and out of mind. In some cases, finances can be so messy that you don’t even know where to begin. Your first step is to identify and sort things. Find all bank accounts, all retirement and Social Security payments, any accounts like 401(k)s or IRAs, and any insurance policies that your loved one may have in effect. This will provide a starting point for organization. You will also want to identify any outstanding obligations or debts. The sooner that these things can be resolved, the better.

 

While this cannot incorporate every issue you might encounter, it provides a good point for you to begin helping with.

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