A recent round of ‘reply all’ emails among classmates of mine brought up a common issue: how to handle financial issues with aging parents.
A couple of classmates who make up my ‘crew’ from 40-plus years ago in school are now are now addressing the inevitable and unenviable task of managing their parents money. The stories from my classmates range from the benign–a parent with memory problems who just needs to have bills paid and checking accounts and investments monitored, to the horrific–a second marriage and an unscrupulous new stepmother who attempts to clean out a lifetime of savings from her older and vulnerable new husband.
I’m going to offer up a couple of suggestions in this post, based on common sense and personal experience. (Mommy Dearest and my late father were absolutely obsessive in their preparation for the future, and doggedly pragmatic, so–thankfully–I have had little to be concerned with on this front.)
What I would really appreciate on this subject is comments from you. Why? Because I just think this is a subject that really benefits from group discussion. One man’s (or woman’s) experience, no matter how broad or expert, can’t cover all the bases. So please, chime in.
What I say in this post, or in any other post on this blog, is not legal advice. Talk to a lawyer.
First, parents and children are going to have to communicate with a maximum of love, patience, and honesty, and with a minimum of emotion and absolutely no ulterior motives…about one of the most sensitive subjects on the planet: money. This is challenging under the best of circumstances.
My advice: write down your concerns and the issues you need to address, talk face to face if possible, in private, with no time limits, and go down the list, one by one. Ask questions, and listen. Be candid, but kind: one day you’re going to be in this position, and you want to be treated fairly when that time comes.
Second, plan in advance. Get a lawyer to draft a will or trust that’s appropriate for the situation and the size of the estate…and valid in your parents’ domicile. (Wills in Boston, MA can be very different from wills in Los Angeles, CA.)
Be careful in trying to use dowloaded forms from the internet. Think long term for children–education being a primary concern–and short term for the parents: what’s the next 6 months, year, and two years hold for them?–with financial stability and healthcare being primary concerns.
Third, if the family tree and financial portfolio permit, I would encourage parents and children to keep it simple. A lot of problems can be avoided and a lot of daily transactions made easy if a child’s signature is added to a parent’s checking account, for example. If the parent is incapacitated and needs care, the child can withdraw money or write a check to a home-care nurse. If the parent dies, the child can access funds for a funeral. This is a lot easier than brining a death certificate and a copy of the will into the bank and trying to access the funds then.
Caveat: parents have to trust their children not to dip into the till, and children have to be trustworthy. Note: it’s better to go hungry and sleep in the streets than betray your parents trust and take money that’s not rightfully yours. You did stupid things as a teenager (not me, of course). But you’re an adult now: the costs of being deceitful or irresponsible are greater now, emotionally and financially.
Fourth, I would encourage parents to really think about and then clearly articulate their wishes for ‘who gets what’–from the crystal punch bowls to the blue chip stocks–while they are alert and in good health. Wills can be contested if one party thinks the parents were mentally incapable or if their decision-making ability was diminished. Decisions made in a hurry can be less than the best. Then, once decisions have been made, I would encourage children to accept and agree to these wishes if they make sense.
Finally, I’d encourage parents not to change their minds about these things. Talk about it. Think about it. Make a decision and live (and die) with it. Exceptions would be if a child develops an addiction to drugs or alcohol, for example. If that happens, then it’s back to the drawing board: everybody sits down again and discusses the situation, concerns and options are kicked around, and decisions are made and executed again, with the new considerations in mind.
I wish you all the luck I’ve had in this area.
Now, it’s your turn to contribute with expertise and personal experience.