At some point, adults may no longer have the cognitive ability to pay their bills. If this happens to your parents, you might have to provide assistance.
You have several options, depending on the circumstances your parent or parents face.
The basic steps to take
According to advice from AARP, a few simple actions can help when parents or seniors lose the ability to cope with financial obligations. You should set up a joint account when your loved one has the mental competency to add your name to the account. This action, which allows you to write checks, monitor bank account balances and withdraw money, makes sense in the following situations:
- Your parents have reached an advanced age
- They show signs of mental decline
- They have a diagnosis of a progressive disease
You can also consider the option of appointing a fiduciary. This, too, must happen when the senior retains his or her mental competency and it can take several forms.
It might involve the documents for establishing power of attorney and establishing an agent to act on a person’s behalf. Other legal options, depending upon circumstances, include creating a trust, appointing a professional or governmental fiduciary or naming a representative payee.
The consequences to avoid
Many seniors face financial exploitation; thoughtful estate planning can avoid this. Also, mismanagement and failure to pay bills can result in excess fees and loss of financial status.
The lack of an estate plan can lead to family conflicts and the inability to carry out the wishes of your parent or loved one. Taking action before matters get worse can save money and simplify estate planning.