Is Your Aging Parent An Out Of Control Spender?

There is a point when adult children get very worried about an aging parent burning through cash. The adult child sees the long term consequences:  the parent will drain assets down to nothing and the kids will end up supporting them.  This is real.  There is good cause for concern.

"Patrice" is an example. She's 60 and her mom, "Diana" is 86. Diana was never good with budgeting or money. Dad always did all that. After he passed, Diana spent money as if there were an endless supply. She is in pretty good physical health, but her memory is slipping badly. She was recently diagnosed with dementia. At first, Patrice didn't try to stop her. "I made excuses for her stupidity" Patrice says, as her mother engaged with an internet scammer calling himself David Brown, who called her every day on the phone. But after thousands went missing from the checking account and her stock portfolio was reduced by half, Patrice stepped in to try to get control. She has a durable power of attorney and had the legal ability to block further withdrawals from mom's account. She took everything away from Diana but one credit card. And what did the clever thief "David" do? He instructed Diana to get a cash advance on that card, she got it and immediately gave him all of the money.

Patrice was at her wit's end! She finally set up a debit card with limited access so that Diana could not charge anything not on the approved list, nor get cash advances any longer.  That put a stop to the spending but it created a lot of stress between mother and daughter.  Patrice is concerned that her mother could run out of money as a result of her addiction to giving the scammer everything she could.  She wants her mother to enjoy the time she has left but not with throwing her money around as she did. In retirement, Patrice did not plan on having to support her mother because of what she called dumb choices about spending.

One thing Patrice has to say is that if you are the person appointed to be power of attorney or trustee (Patrice is both), you need to limit a parent's wild spending sooner, when the ominous signs of scams or other dangerous use of their money first surfaces. In other words, use the power of attorney to move money away from your aging loved one.  Put it where she can't access it and neither can those thieves. Whether it's a phony "David Brown" or an obsession with buying something else she doesn't need, someone needs to exercise limits.  The adult child appointed on the legal document has the right to limit what a parent does with funds. This is not without risk, as a durable power of attorney can be revoked. But in this case Diana is too forgetful to do that.

The takeaways from this case about an aging  parent's reckless spending are these:

1.  If you have the legal authority to stop the parent's crazy spending, use it.  Don't be shy and don't wait for it to get worse. 
2. If you don't yet have authority, try to get it with everything you can.  Use the court as a last resort. Guardianship can be the only way for some to stop a relentless scammer.
3. If your parent becomes outraged over your control, ask yourself whether that is worse than having an aging, incompetent parent spend down to nothing and be left in poverty.

No one can guarantee that a parent's financial good judgment will be there until the end of life. We need to be on the alert for any parent with memory loss or trouble handling money.  They are favorites of the thieves who love to take their assets.  A smart and savvy adult child can thwart reckless spending with the right paperwork and a watchful eye.

Carolyn Rosenblatt, RN, Elder law attorney

AgingParents.com and AgingInvestor.com

Advocating for healthy aging and safety for aging loved ones