How to step in and help elder parents with finances

NEW YORK — At first you might notice a pile of unopened mail. Your normally fastidious mother may be getting sloppy with her checkbook. Your elderly uncle may be behind on his electric bill.

The signs are often subtle, but they may indicate that aging relatives are no longer able to handle their personal finances.

Family members who sense this may want to step in and take over, but that could set up an emotional confrontation. It could also make older relative fear losing their independence.

There are options to provide help, but they all start with having a conversation that can be difficult.

Opening the door. “Don’t wait for the signals to begin having the conversation,” advised Kevin Gahagan, a financial planner with Mosaic Financial Partners in San Francisco, who said he has dealt with such situations both professionally and personally.

“I encourage our clients who are older to have discussions with their children,” he said, “and I encourage our clients who are younger to have discussions with their parents.”

Those who aren’t proactive in talking about finances may be met with resistance. One strategy is to see if a non-family member who has a relationship with the elder relative — such as a doctor, attorney or financial planner — is willing to get involved.

But don’t assume that everyone will refuse help if it’s offered, noted Laurie Siebert, a financial planner with Valley National Financial Advisors in Bethlehem, Pa.

“A parent might be afraid that they’re going to be bothering you, that you’re too busy,” she said.

In fact, some older folks may want to broach the issue themselves if they sense they’re having trouble, but could be reluctant or too embarrassed.

Once the conversation is started, be sure to discuss a budget, their income, assets and insurance policies. It can also be a good time to make sure that a will is in place, and discuss whether a health care power of attorney is appropriate.

Helping to boost income. Bill paying problems may stem, at least in part, from the person living on a fixed income. If that is the case, a range of local, state and federal programs are available that can help cover heating and other utility bills, provide meals, pay for prescription drugs and even reduce taxes.

“There are lots of benefits programs out there that people are eligible for” but don’t take advantage of, said Wendy Zenker, a vice president of the National Council on Aging.

If they have applied for programs in the past and been turned down, some people may now qualify because of the recession. “I think it is fair to say that yes, people who were otherwise not eligible are finding that they are now eligible,” she said.

Another potential source of funds is unclaimed pension benefits. The federal Pension Benefit Guaranty Corp. returned $137 million to more than 22,000 people between 1995 and 2007. The most recent data available showed the agency, which handles pensions of bankrupt companies, held $133 million in unclaimed benefits for 32,000 people, averaging nearly $5,000 per person.

Moreover, some companies fail to pay benefits because of paperwork foul ups and other matters. Nancy Hwa, a spokeswoman for the Pension Rights Center, a nonprofit organization that handles pension and 401(k) issues, said more than $85 million in unpaid pensions was recovered through various programs in the last decade. Labor unions can also help track down missing pension funds.

Family members should also check safe deposit boxes for savings bonds and other assets. And if elders have left mail unopened or failed to cash checks, also search for unclaimed funds with the state comptroller or department of state. “I have a client who never opens her mail, and when we added up all the checks that weren’t open, there was more than $10,000,” said Siebert of Valley National Financial.

Getting organized. Make sure direct deposit arrangements are in place for Social Security, pensions and other income sources. Likewise, automatic bill payments for utilities, rent and other bills should be set up.

When possible, family members might want to arrange for duplicate bank statements or bills to be sent to them, so they can track spending, service fees and other transactions.

Family members who do not live near elderly relatives or encounter resistance may consider bringing in a bookkeeping service or a daily money manager.

Roberta Gosier, president of the American Association of Daily Money Managers, explained a daily money manager will meet with the person and help the get their financial affairs in order. Typically, visits take place a couple of times a month, she said, and most of the time they get permission from the client and don’t need a power or attorney or other legal arrangement.

Gosier warned that hers is still a largely unregulated profession. “It is a new field, and it’s also a field where there’s potential for financial exploitation, especially with an elderly, vulnerable population,” she acknowledged. Her organization has created a certification program intended to qualify credentials and standards of practice.

Daily money manager fees vary around the country, generally ranging from $40 to $100 an hour, Gosier said. A similar service is offered free by AARP, utilizing volunteers to help people handle their finances. The volunteers are recruited by AARP, but supervised by local agencies that partner with the organization.

“This is being provided to people who couldn’t otherwise pay for the service,” said Robin Talbert, president of the AARP Foundation. “It provides a tremendous service to the people who need the assistance. It also provides a lot of satisfaction and reward for the volunteers.”