Helping you Manage the Financial Details of Your Life



Avoid Making a Mess of Your Parents’ Finances – Part II

Messes are sometimes what results when well-meaning adult children take over their parents’ checkbooks. In my last blog, I gave three best practices for paying elders’ bill. In this post, I offer three more:

Keep your money separate. If you have a joint account, deposit only your parent’s money into it, and pay only your parent’s expenses from it. If you made a purchase for which you want to be reimbursed, keep a copy of the receipt and record how you reimbursed yourself.

Avoid paying yourself with gifts. Many times a parent wants to reward the person who is helping her. For example, she may tell her child to use her debit card to buy herself groceries. This common method of compensation makes it difficult to be accountable for Mom’s money. It also can create serious problems, especially among siblings. Sometimes they are jealous. Other times they are concerned that the helper is taking advantage of Mom. I have witnessed families tear themselves apart when another child learns that Mom’s helper is receiving gifts. It does not matter whether the gift is an occasional fill-up of gasoline or a brand new car. It’s the idea.

Pay yourself a salary. If you and your parent agree that you should be compensated, decide on a regular salary. Put the arrangement in writing, and ask your parent to explain it to your siblings. Then write your check exactly as agreed. Perhaps your parent is unable make this decision and you want to be paid for your work. You and your siblings may reach an agreement about a reasonable payment. If you can’t, discuss the situation with an elder law attorney.

Managing your parent’s daily finances is much more than writing checks. You need to have legal authority to work with Mom’s money, and you must be meticulously responsible for it. You need to balance Dad’s privacy and wishes with the family’s desire to know what is happening. These guidelines – offered in this and my previous post – will help you avoid common pitfalls and be accountable for your work.