As parents age and their health declines, there will likely come a time when you need to get involved in their finances. While having those conversations around finances can be uncomfortable and awkward, doing so sooner rather than later can help protect them from financial missteps.<\/p>\n
“It’s inevitable that at some point the financial keys will need to be handed off to somebody,” says Angie O’Leary<\/a>, head of Wealth Planning at RBC Wealth Management–U.S. “Either you plan now, or you don’t, and then it becomes a crisis.”<\/p>\n The risks of avoiding important discussions with your parents as they age could be financially ruinous. In 2022, financial fraud targeting the elderly rose 84 percent from 2021, to $3.1 billion in losses, with the average loss reported at more than $35,000, according to data from the FBI.<\/p>\n The concurrent rise in age-related cognitive diseases is one factor fueling the growth of elder financial fraud. With each passing minute in a day, another person develops Alzheimer’s disease, according to the nonprofit Alzheimer’s Association. The organization forecasts approximately 14 million U.S. residents becoming afflicted with that form of dementia by 2050. People are now living longer than ever, but with age comes an increased risk of cognitive illness<\/a>.<\/p>\n Tara Ambrose, senior manager of client risk prevention<\/a> at RBC Wealth Management–U.S., tells a cautionary tale of one client who didn’t understand that her husband had dementia. The husband lost their entire financial nest egg through making bad business decisions and failing to pay taxes, Ambrose says, “and by the time she got involved, everything was gone.” Eventually, the couple had to declare bankruptcy.<\/p>\n While the potential for fraud or age-related diseases can’t be eliminated, family members can mitigate the impact by discussing those issues and other financial topics with their parents as they age. Those talks may not be easy, but the sooner they begin the better.<\/p>\n “Planning early and making the conversations about financial safety and security helps eliminate some of the emotional charge,” O’Leary says.<\/p>\n Such important conversations can be tough for families, but one method to get parents comfortable with the idea of someone else looking after their finances is to shadow them. “It can be better if you can walk alongside them before you have to completely take over,” O’Leary says.<\/p>\n One option is offering to periodically review your parents’ accounts with them for potential problems. That could happen as little as once a month, when many bills get paid. “In my husband’s case,” O’Leary says, “at the beginning, he was double-checking his parents’ finances and meeting with them monthly. Now he has full financial capacity for them.”<\/p>\n But don’t be surprised if attempts at discussing your parents’ finances don’t go according to plan.<\/p>\n “Sometimes the parents feel ambushed,” Ambrose says. “If they shut you down, then respect that.”<\/p>\n Consider a different approach, or a different messenger, Ambrose explains, such as suggesting your parents talk with a respected professional like a financial advisor or an attorney, for example.<\/p>\n It’s vitally important for families to have key legacy documents in place—and make sure they are current. First is the will, a document that details how an estate should get distributed. Most people understand the benefits of a will in estate planning, and that without one, heirs will likely be left grappling with government bureaucracy.<\/p>\nProtecting the elderly from fraud and illness<\/h2>\n
How to start the conversation<\/h2>\n
Get estate documents in order<\/h2>\n