You may be seeing your parents for the first time in a while this holiday season — and you may notice some changes in how they're living.

Oftentimes, it's the holiday season when the adult children of aging parents realize that mom and dad need some help!
While their physical health and ability to live independently may be visible, financial difficulties are a bit harder to see. As you visit with your parents or other older relatives this holiday season, here are some tips you'll want to keep in mind.

How to Know If They Need Help

If you notice any of the following, it can be a sign that they are in need of assistance with managing their money:

• Unusual purchases. Are your parents making more than one or two random purchases for items they don’t need, never use and/or don’t fit their lifestyle?
• Unopened mail. If your parents are ignoring important financial missives, they may be unable to manage their bills and accounts any longer.
• Physical setbacks. Debilitating arthritis, a broken bone or failing eyesight can all make the simple act of writing out a check excruciatingly painful, or even impossible.
• Cognitive impairment. If your parents are having trouble remembering the day of the week, they’ll likely neglect paying bills on time (or even at all).

Communicate Openly

Before you take any real steps toward managing, or assisting with, your parents’ finances, it’s a good idea to have an open conversation with them about your current and future intentions. Explain that if something would happen to either of your parents and they’d need help, you’d want them to be secure in the knowledge that their finances are being managed properly. You can share that you are only there to help, and that you will not take any real action without their full permission, whether this is before or when it becomes necessary.

Gather information

Next, sit down with your parents and ask these questions about their finances:

1. Have you named a durable power of attorney for finances?
   A financial power of attorney (POA) will take ownership of your parents’ accounts if they were to become incapacitated. In absence of a POA, you’d likely have to file a petition with a court of law for guardianship of your parents’ accounts. At this time, you may also want to ask them if they work with a financial planner or accountant.
2. Where do you keep your financial records and assets?
   Make sure you have a clear list of all your parents’ records, accounts and assets. If your parents have been hiding money under the mattress for years, they may have a sizable nest egg in their bedroom and you need to know about it. In addition, keep all account information, as well as a list of your parents’ assets and their locations, in a secure place.
3. What is the name of your mortgage lender?
   If your parents are still paying off a mortgage, or another large loan, be sure to learn the name of the lender and the status of the loan. Record the reference number for the loan as well.
4. What are your monthly expenses?
   Make a comprehensive list of your parents’ ongoing expenses, including all fixed bills and non-fixed bills, as well as seasonal and discretionary expenses.
5. How do you pay your bills?
   Find out which, if any, of your parents’ bills are paid automatically and which account funds the money transfer. Ask about other bills: are they paid via paper check, digital check or a checking account?
6. How much is your annual income?
   Ask about Social Security benefits, monthly pension, investment dividends and any other income stream your parents may have.
7. What kind of health insurance do you have?
   Find out if your parents receive Medicare or Medicaid benefits, and whether they have additional benefits. You’ll also want to inquire about possible long-term care insurance, which can cover the cost of a long-term health aide and/or senior living facility
8. Have you written a will or a trust?
   It’s a difficult topic, but a crucial one: Make sure your parents have a plan for what happens to their assets after they’ve passed on, as well as the name of the attorney where it is filed.

Establish a Plan

At this point, you’re ready to establish a plan for managing, or assisting with, your parents’ finances. Be sure to listen to their personal preferences and to honor their dignity as much as possible. Ask them if they’d like you to take responsibility for one or more of their monthly financial-related tasks. For example, you can pay their mortgage and car payments each month, or make decisions relating to their investments.

Also at this time, consider simplifying their finances in any way you can. For example, if your parents have multiple credit card balances, you may want to consolidate this debt by paying off the balances with an unsecured loan and then having just the one loan payment each month. You can also automate as many bills as possible.

Alternatively, you can talk about the future only, and have your parents agree to let you manage their money if one or both of them become incapacitated in any manner.

If your parents find it difficult to relinquish this bit of independence, start assuming responsibilities for their finances gradually, just one bill at a time. Taking over the finances of elderly parents can be a delicate and daunting task, but it is often a necessary one. Use the tips outlined here to navigate this situation smoothly.

And, check out our recent webinar, "Caregivers, Money & Legal Matters." In this webinar, Certified Financial Counselor Emmanuel Obe shares tips on how to reduce the financial strain that can often result from caregiving.