Managing Family Finances Remotely: A Comprehensive Guide

When I lived in Chicago, an elderly relative who lived nearby named me as her financial power of attorney. By the time she needed my help, I had moved to California. But I didn't have to pass the responsibility on to her second choice. I was able to help my loved one from across the country with only a few obstacles.

With online banking, a change of address form, e-sign software, a telephone, and the occasional help of a local notary or banker, you should be able to do everything needed from a distance to keep an ill or elderly person's financial life rolling. (See also: 6 Things You'll Encounter When Taking Over a Loved One's Finances)

Here are some of the things that helped.

Advanced preparation

In my case, the relative had named me both financial power of attorney in case she became incapacitated, and as successor trustee for her revocable living trust. (A revocable living trust is an estate planning tool that people can set up to make this transfer of responsibility seamless both in incapacity or after death.) These two provisions were extremely helpful, when the time came, in allowing me to access and manage her accounts.

Another thing you could encourage a relative to do to get their financial life in order would be to gather any stock certificates they own and transfer them to a brokerage firm, preferably one that offers online access. And if they have records of the date they purchased investments, they should show you where they keep those records or send you copies. If you have to sell the investments on their behalf, you will need this information to establish the cost basis.

An ally that lives close to the relative

Although I lived far away, my parents lived in the same town as our relative. Because of this, they were the ones who physically went through our relative's papers, with her permission, when she needed to move into an assisted living home. My parents provided me with all her paperwork so I could find out what accounts she had and what bills were coming in. Their status as locals also helped them gather recommendations for an estate sale company to dispose of possessions she'd no longer need and a real estate agent to sell her home.

An open relationship with the relative before they become incapacitated

At first, I wasn't acting on behalf of my relative in an official capacity, but just helping her out. For instance, when a CD matured, I would arrange for her banker to call her at her assisted living home to get her verbal permission to roll it over or buy a different CD. I helped her set up online accounts for her banks, and then together we used the bill pay function to get her phone bill and rent set up on autopay so she wouldn't have to write checks anymore. This period allowed me to ask her questions and make sure I knew about all her investment accounts, her assets, and how she liked to manage them.

If you have to take over, an in-person visit helps get things started

When she did become incapacitated, I was able to visit the town where she lived and go to her local banks in person to show the bankers her trust naming me as successor trustee, the power of attorney, and my own identification. The banks then put my name on her accounts, so from that point on, I could call them with questions or move her money as needed without her permission. Also, an attorney informed me that as her trustee, I could reimburse myself for my travel expenses from her account when I had to do business on her behalf.

One great thing about visiting in person at this stage is that the local bankers gave me their cards, and henceforth if I ever had a problem, I could call them directly instead of going through the phone tree. They remembered me, and some of them even remembered my relative, which I think improved the service I got.

Talking to hometown bankers in person also helped me understand the process better. When I needed to get my name on her brokerage accounts without local offices, I had a better idea of how to make it happen. When you can't go to the financial institution in person, you may have to go to a local bank to get a stamp called a medallion on an application to change the account ownership. This is like visiting a notary, in that the medallion holder is indicating that they checked your identification and you are who you say you are. However, a notary can't give you a medallion stamp — it has to come from a medallion holder. Call any local bank to see if they have one who can help you.

Stay in communication with caregivers

It's easy to put bills on autopay, but it's also important to verify that purchases you make on your relative's behalf are really reaching them and are needed. For example, I set up a standing order on Amazon for supplies my relative needed at assisted living. But sometimes when conditions changed, no one would tell me, and I'd end up wasting money on a product she hadn't used in months. In retrospect, I would have kept in closer communication with staff at her assisted living facility to keep abreast of her product needs.

Work with real estate agents and other professionals who use online documents

It's certainly possible to sell property from across the country by signing paper documents and faxing them, but it's a lot easier if the agent you work with simply sends you a link that you can e-sign on your computer.

Keep an eye on statements, especially if your relative still has a checkbook

For awhile after I took over her finances, my loved one still wrote the occasional check, usually to her church. Although I asked her to let me know when she wrote one, she always forgot. Knowing this, I made sure to keep a buffer of cash in her checking account to prevent overdrafts. If your loved one's check writing habits change suddenly, or you're worried they could be taken advantage of, it's probably time to get the checkbook out of their hands. (See also: How to Protect Elderly Loved Ones From Financial Scams)

Check your relative's credit report regularly

This is something you should do when you first start handling a loved one's finances, and periodically after that, especially if you live far away and wouldn't know if someone shady has been calling or visiting your relative. If you have been named power of attorney, you can request the credit report by writing to a credit bureau and including a copy of the power of attorney.

Take care when sharing account information among family members

In a lot of families, more than one person might share the responsibility for handling a loved one's finances. In my case, my parents received her mail and deposited checks at her local banks until I set up all her accounts as direct deposit.

Because of this shared responsibility, we sometimes had to share account numbers or her Social Security number with one another. We made sure not to transmit this information in an insecure way, such as email, but instead would call one another to read an account number over the phone.