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10 Steps to Help You Manage a Loved One's Money

What to do when you suddenly realize you must take on financial caregiving

spinner image Senior woman with her carer calculating bills

If your parent or loved one needs help with day-to-day tasks, they probably also need help managing their money.

More than nine in 10 caregivers hold some financial caregiving responsibilities, according to a 2020 study from Merrill investment management in collaboration with Age Wave researchers of Orinda, California. 

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You may gradually realize you need to step into this role when you find stacks of unopened bills. Or you may be thrust into this responsibility suddenly, such as after a hospitalization.

In the early stages of managing a loved one’s money, you’ll likely be overwhelmed with the change in circumstances. To help get you through the first stages of your new role, we’ve created a 10-step plan:

1. Sort the bills

First, tackle that mail pile. Look for bills, as well as bank and credit card statements.

If your loved one uses online billing, you can contact the utility companies about accounts and check your loved one’s wallet for credit card information. In addition, “Review bills carefully to make sure the expenses were actually incurred and the amounts are appropriate,” says lawyer and accountant Bruce Tannahill, a Wichita, Kansas, director of estate and business planning with MassMutual Financial Group.

2. Don’t forget other payments

Even if you think you’ve figured out all the recurring expenses, remember that income tax, insurance premiums and property tax notices may arrive on an irregular schedule such as annually, biannually or quarterly. If you’re taking on a financial caregiving role for more than just a few weeks, consider having the mail forwarded to your address, Tannahill says.

3. Check on income

Gather information on insurance policies, investments, pensions and Social Security. Bank statements and tax returns should supply much of this information, and your loved one’s accountant — if your friend, parent or sibling has one — can also help, Tannahill says.

To keep any investment accounts safe, see if you can be added as a “trusted contact person” at your loved one’s brokerage. This allows the financial adviser to alert you about irregular activity but does not give you access to the money. 

4. See about accessing a bank account

If your loved one is able to make financial decisions, that person can set up a durable power of attorney or add you as a joint owner to a bank account. Some states let you set up a convenience account, also called an agency account. This account allows transactions that benefit the account’s owner. You cannot use the money for your own needs, and you will not inherit the account, as you would with a joint account.

Because not all bank employees are familiar with these accounts, the Consumer Financial Protection Bureau (CFPB) suggests talking to a branch manager to find out whether or not you are able to set one up.

5. Automate as much as possible

If your loved one doesn’t use automatic payments for ongoing bills, set up payments for these regular outlays.

The same goes for income such as dividends, pensions and Social Security. Set up direct deposit if your loved one hasn’t done this.

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6. Evaluate services

Once you’ve decided how the bills will be paid, consider which services should be continued. If your loved one is not at home, cancel — or put on hold — cable service and newspaper delivery.

If the plan is to continue to live at home, perhaps housekeeping and lawn care are worth investing in. AARP’s Home Budget Analysis tool can help you evaluate spending.

7. Document spending

You must note each expense paid and save original receipts.

“This can help [your loved one] ensure that anything paid in their absence has been correctly accounted for, and can help them get back on track when they are able to begin to manage their finances again,” Tannahill says. Diligent documentation will also protect you against any accusation of financial abuse.

8. Be transparent

To avoid causing any family strife or making your loved one feel disempowered, be sure to “keep them informed of their financial status and involve them in decision-making, when possible,” says Andrea Worden, a lawyer and partner in the Norman, Oklahoma, firm Worden and Carbitcher.

9. Be judicious with expenses

No matter how much work you’re putting in to handle affairs, don’t pay yourself from your loved one’s bank account unless you have a formal written agreement regarding compensation. Make sure never to use or borrow money from the accounts, even if the purchase, such as a new car to drive them to appointments, would appear to benefit you both.

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10. Consider professional assistance

If it looks like your loved one will need long-term help, or you would prefer a formal arrangement, meet with an estate attorney for advice on setting up power of attorney, a living trust or an adult guardianship.

“They can help you understand the legal and financial implications of your decisions and provide guidance on managing your loved one’s finances effectively,” Worden says. 

Initially look at this task as temporary. Your loved one may be able to handle bills again soon. In the meantime, your work as a financial caregiver will help make sure their financial house is in order in the short term and long term.

David Rodeck is a writer based in New York City. He has written for Kiplinger’s Personal Finance, Forbes Advisor and Investopedia. Before becoming a full-time writer, Rodeck was a financial advisor.

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