From the AARP: For More Info, Go Here…
Age and ill health, particularly dementia or other conditions that affect memory and cognition, can impair a person’s ability to responsibly manage one of the most important components of their livelihood: their money.
That makes it all the more important to have the uneasy but essential conversation with loved ones about who will oversee their finances, and how, if they no longer can. Here are some important legal and financial tools to understand and potential problems to look out for if you need to take on the role of money manager or find someone else who can.
While your loved one is still able to do things like write checks and use an ATM, discuss adding a trusted family member or friend to their bank account.
This sensible precaution may never be needed. But it can only be taken when the account holder is fully mentally competent and can help ensure that bills continue to get paid if a stroke, short-term memory loss or other health issue leaves your loved one unable to make payments, comprehend money or use sound financial judgment.
If your loved one is in the early days of a progressive disease such as dementia or amyotrophic lateral sclerosis (ALS), having a second person on the account is essential. When needed, that person can step in as a money manager to pay bills, make deposits and withdrawals, and monitor the balance to make sure your loved one is not being scammed or financially exploited.
Once they take over, a money manager should cancel your loved one’s credit cards, PayPal, Venmo, department store cards and other lines of credit and payment channels.
If mixing family and finances makes your loved one uncomfortable, there are money-management programs that help with bill paying. To find one, contact an Area Agency on Aging.
What can go wrong?
Many people find a joint account to be the easiest way to pay a loved one’s bills and keep track of expenses. But it is not without risks:
- The second person on the account could use the signing or ATM privilege to steal from your loved one’s account.
- Creditors of either person may try to collect debts from the account.
- Money in the account when either person dies belongs to the surviving account holder. This can create conflicts among siblings or other potential heirs (see below).
Depending on where your loved one lives, you may be able to avoid these pitfalls with a “convenience account,” which about half the states allow. With convenience accounts, a second person can be designated to make transactions, but only for the benefit of the original account owner. The second person does not get to use the money or inherit it when the original holder dies.
And much more…