Managing money and finances is difficult at any age, but senior citizens in Los Angeles County are especially vulnerable to financial problems brought on by an inability to adequately care for their own affairs. If this happens, seniors may find themselves with their utilities shut off, unable to make mortgage or rent payments, and unable to purchase the necessities of living. It’s extremely difficult to come back from such a situation, especially if the only reliable income is from Social Security. Fortunately, there are many ways for adult children to manage their elderly parents’ finances.
Here are 3 ways you can plan to manage your elderly parents’ finances, or plan for an eventual transition of their financial affairs to your control:
Power of Attorney
One of the most common ways to assist with the financial affairs of a senior parent is to use a Financial Power of Attorney document. A Los Angeles County elder law attorney can advise as to which type of POA is the best for your parents’ situation – either a Durable POA, which is in effect as soon as it is signed, or a Springing POA, which only comes into effect when the senior is incapacitated and cannot care for their own affairs. Someone with Power of Attorney over another person has a fiduciary duty to make financial decisions that are in the best interests of the person granting the Power of Attorney.
Revocable Living Trust
Like a Power of Attorney, a Revocable Living Trust is useful for handling financial affairs, especially in early planning. When a Trust is set up, a Grantor names a Trustee to handle all Trust property, and also names a Successor Trustee to serve if the original Trustee cannot fulfill their duties. Typically, the Grantor serves as the initial Trustee, allowing them to control their own finances. When they are no longer able to handle their affairs, they can turn control over to their pre-designated Successor Trustee. As with the Power of Attorney, the Trustee and Successor Trustee must abide by their fiduciary duty to act in the best interests of the Grantor.
Conservatorships in Los Angeles County grant control over an incapacitated person’s financial and healthcare concerns to a conservator who is appointed by the court. This is a common scenario if a senior can no longer handle their affairs and did not create an estate plan that directs who should handle their finances when they are unable. Many times the conservatorship is granted to a family member, but there are situations when a third party is named to handle the senior’s affairs. If you believe a conservatorship may be an option for your elderly parent, please consult with a Los Angeles County elder law attorney to determine your best course of action.
If you would like to learn more about managing your elderly parents’ finances, or discuss ways to eventually transition control of finances from parent to child, please set up an appointment at our Los Angeles County elder law office by calling the Law Offices of Gerald L. Kane at (818) 905-6088.