So, your parent is squandering their estate on lavish gifts or questionable purchases. Watching a beloved parent make questionable financial decisions can be heart-wrenching. Because when they give away their money and property, they aren’t just forfeiting material assets; they’re giving away their future, as well as the future financial security of anyone who might inherit from their estate. Whether it’s sudden generosity, unexplained expenses, or a new, overly influential friend, acting swiftly to protect their assets is essential.
At Marcia L. Campbell, CPA, we have helped countless seniors regain control of their finances to provide their entire family with peace of mind. Our passion is helping you and your senior loved one make the most of their golden years together. This guide will equip you with the knowledge and strategies needed to understand how to stop an elderly parent from giving money away.
Signs Your Parents Are Giving Away Money
It’s the norm for many people to want to keep their finances private, and your parents are no different. They will likely not admit they are having financial difficulty willingly, or even worse, they may be entirely unaware of the financial damage they are doing. Because of this, you may have to look for signs they are struggling with money before determining how to stop an elderly parent from giving money away. Here are some signs this could be happening.
“Many of these signs are representative of something important to remember – you must maintain regular contact with your parent so that you are aware of changes in their life. Regular communication and check-ins are important, especially as they get older. It is time to care for them like they did for you when you were young.”
– Marcia L. Campbell, CPA & Private Fiduciary
Related Article: How Do You Take Care of Elderly Parents’ Finances in California? Pt. I
Lots of Money is Leaving Their Bank Account.
If you notice unexplained sums of money leaving their account or even a sudden loss of cash, it’s critical to question this disappearance. If there is no reasonable explanation, they are likely squandering it or giving it away.
These transactions could even be evidence of fraud or that they have been scammed.
Related Article: How Do You Talk to an Aging Parent About Finances? Pt. I
They Are Being Excessively Generous.
Another telltale sign that your parents are giving money away is if they are spending more than they can afford on gifts for other people.
Whether they are paying expensive bills when they go out to dinner, buying expensive jewelry, or even giving away expensive assets they already own, it is crucial to reassess this situation with them. In many situations, this could have severe consequences for their financial well-being.
Still, if the root of the issue is your parents simply value giving gifts, it is essential to try to work on a plan to moderate their generosity so they don’t get taken advantage of.
They Are Experiencing Sudden, Unexplained Financial Difficulties.
If your parents are suddenly experiencing difficulty paying bills or other necessities, it could be a sign that they are spending their money elsewhere or giving it away.
Closely monitor their credit card bills, pay attention to their cash flow (especially if they have multiple sources of income, like social security, retirement, a 401k, or paychecks from a job they are working), and be extra vigilant in identifying irregularities.
Take note of mail and past due bill notices. For example, if your parents can no longer pay their electricity bill, this could be a sign that they have fallen victim to a scammer.
Related Article: How Do I Monitor My Elderly Parents’ Finances?
They Have a Sudden Love Interest or New Friend.
The older people get, the more vulnerable they are to scams and financial elder abuse. This is one of the most common situations that make children gain an understanding of how to stop an elderly parent from giving money away.
Many people will target them by getting close under the guise of a romantic relationship or friendship. In doing so, they will try to take advantage of them and use their money.
If you notice that your parent suddenly has a new love interest or a new close friend you’ve never met or heard of, you should be cautious and ensure the other party has good intentions. They could be giving them money at the expense of their future financial security.
There Are Sudden Changes in Their Will.
A huge indicator that someone may be exploiting your parent or that your parent is frivolously giving away their money is a sudden change in their will.
Typically, this change will involve introducing a new beneficiary who will receive a large part of their estate, which could be a red flag that someone is manipulating and exploiting them. Alternatively, a change in listed assets and a diminished estate could also signal they are giving away money.
As soon as you notice these changes, investigate why your parent made the change and to whom they are leaving these assets, and track these changes.
They Are Aging and Experiencing Cognitive Decline.
The reality is that, as your parents get older, they will experience cognitive decline. As a result, managing their finances will become more than just a challenge for them; it will become a hazard to their future financial security and could undermine their retirement.
Several factors come into play. If a parent lives alone, loneliness could make them more vulnerable to scammers who pose as friends or a romantic interest. Cognitive decline could also mean that they isolate themselves, making it harder for you to monitor their spending.
The last and most important crucial factor is cognitive impairment. Conditions like Alzheimer’s disease and dementia make your parent susceptible to scams, fraud, and financial abuse, and it makes it impossible for them to manage their finances safely and independently.
Because of this, getting professional help is essential. But that is just the beginning of understanding how to stop an elderly parent from giving money away. Here’s what to know!
Related Article: How to Prepare for Taking Over Elderly Parents’ Finances
How to Stop an Elderly Parent from Giving Money Away
As soon as you notice your parent is either engaging in reckless spending behavior or has fallen victim to fraud or a scammer, intervening and helping ASAP is of the utmost importance. Depending on their personalities and situation, some solutions may be more effective than others. Here are steps to take when determining how to stop an elderly parent from giving money away.
Related Article: How Do I Protect My Aging Parents’ Assets and Finances?
Start the Conversation.
The first step in this process is starting a conversation with your parents. Remember–this situation is likely emotionally charged, and their pride could get in the way. Communication is critical, but remember to listen and understand their perspective.
Be calm, patient, and empathetic, and come from a place of compassion. But this conversation should extend beyond your parents. Talk to your siblings about your parent’s care and finances. You should also discuss this situation with any other relevant family members.
For example, if a family member receives a lot of money from them, this could be a way to get to the root of the problem. However, avoid making your parents feel like you are ambushing them. They may shut down if they feel like everyone is teaming up against them.
Related Article: How Do I Talk to My Parents About Their Spending Habits?
Educate Your Parents.
Knowledge is vital when learning how to stop an elderly parent from giving money away. Teach your parents about scams and other exploitative tactics these fraudsters employ so that they can defend themselves against them.
It will also behoove everyone if you help your parents learn more about their financial situation and how to control and monitor it on their own to the best of their abilities.
Related Article: How to Help an Elderly Parent Manage Debt
Take a Hands-On Approach to Monitoring their Finances.
Now, an important part of this process is going to be taking a hands-on approach to monitoring their finances. It may feel like invading their privacy, but you are looking out for them, so do not let those reservations prevent you from intervening.
Read their mail to stay on top of their financial situation. This could include going through bills and financial statements to identify attempted scams or severe changes to their finances. By doing so, you will be the first to notice unexplainable expenses or missed bill payments.
You should also monitor bank accounts, checkbooks, and anything they use to make purchases or send money. Limiting technology usage is also crucial.
After all, everyone has access to the Internet, the Internet is home to many scams, and technology also makes sending and giving money away easier.
Related Article: How Can I Protect My Elderly Parents from Scams and Fraud?
Work with a Professional.
We have provided an in-depth guide on how to stop an elderly parent from giving money away, but this is clearly a full-time job that requires considerable expertise.
Working with a professional is crucial to safeguarding your parent’s estate and financial future. First, have your parents meet with a financial advisor to understand their situation and how their spending habits could be impacting their finances.
This could encourage them to make smarter choices with their money. Also, the truth of the matter is that they are more likely to listen to an objective and professional third party than you. After all, no matter how old we are, our parents always view us as their children.
One great solution could be to designate a professional with a financial power of attorney and tailor it to their situation. They can then monitor bank accounts, pay their bills, track retirement, social security, and different forms of income, pay their taxes, create a budget, and more.
Other tools include setting up a trust and appointing a private fiduciary for the elderly as the trustee to protect their savings and assets, using elder care financial services, or hiring a daily money manager. Trustee services and other fiduciary services can be a great way to help your parents maintain their independence without compromising their future financial security.
“If you decide to use a power of attorney or trust, it’s important to work with an estate planning lawyer to set them up and tailor them to your parents and their financial situation so they are as effective as possible. If your parents lack the capacity, a power of attorney may not be an option. You will need a conservatorship.”
– Marcia L. Campbell, CPA & Private Fiduciary
Related Article: How Do You Choose a Fiduciary for the Elderly?
How We Have Helped Stop Seniors from Giving Away Money
To illustrate how a professional can help those who are trying to figure out how to stop an elderly parent from giving money away, let’s explore an example of how we helped a client.
Mr. and Mrs. E were in their late eighties. They lived much longer than anticipated and were tired of their financial paperwork. Managing their finances was becoming a challenge, and their daughter noticed that they were unable to keep up and money was inexplicably disappearing.
Knowing they needed help and seeing the risk this posed to their finances, their daughter decided to step in. But she also needed to manage her career while making time for her husband and kids. For those reasons, she asked us to help with her parents’ financial responsibilities.
We started paying Mr. and Mrs. E’s regular bills, monitored their income, and oversaw their bank accounts to ensure their money was being managed responsibly. We brought in the appropriate services when they needed assistance in the house.
They could call our office instead of their daughter if they had any concerns, and their daughter felt reassured her parents were being cared for while she took care of her own family. The best surprise for their daughter was that her parents’ needs were met, and they had no complaints!
When she visited her parents, it was a peaceful and comfortable experience for all of them. Most importantly, however, she could be the daughter and not the financial manager to make the most of their golden years alongside them.
Related Article: Elder Care Financial Services: What Are Daily Money Managers for Seniors?
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