If it hasn’t happened already, it will. If you have aging parents, one day, sooner or later, you will assume responsibility for making daily decisions on their behalf.
At a future point in time, your parents will struggle with tasks that were once easy. The sphere in which you’re most likely to intercede first will be the business transactions of daily living – crunching numbers, balancing check books, managing investments, and paying bills.
The essence of this responsibility: You will be taking on the business operations of another household. It’s easy to underestimate the time required. Think about the time you already spend managing income and expenses for your own household; multiple that by 1-and-a-half and you’ll approximate the amount of time needed for your parents’ paperwork.
I’ll provide an overview of the complexity of the challenge but, in doing so, I am not trying to daunt you. Rather, I am trying to motivate you to act sooner rather than later.
According to a recent Wall Street Journal article, about one-fifth of adult children report having parents and family members with diminished financial faculties. The time to act is before the first signs of trouble. Wouldn’t it be better to have your parents’ assistance and support during the transition of their everyday transactions to you?
The starting point: Familiarize yourself with every aspect of your parents’ financial picture. That means piecing together their income, expenses, assets, bank accounts, investments, and so on. Take a delicate approach; be sensitive to their discomfort and the possibility of some initial reluctance.
A generational experience
Many aging adults were affected by the Great Depression. That era’s financial crisis shaped attitudes and money management practices. This adds complexity to the changeover of administrative duties.
Do seniors affected by the Great Depression have confidence in banks and investment companies? Only marginally. Do seniors trust online money management? Not really. Do they keep comprehensive and orderly records? Usually not.
What does this mean? It could mean that you’ll have to find and review heaps of printed statements from an assortment of banks and investment companies, locate shoeboxes full of receipts, track down sources of retirement income and benefits, and pinpoint tax records that are probably stuffed into cubbyholes and closets.
Retirement investments and insurance policies can be with several institutions. Income and dividends may arrive from numerous sources – some via mail and others through direct deposits.
How do we deal with this? First, ask permission from your parents. Then have a family conference. If you have siblings, bring them into the conversation and decide who’s most fit to lead and who will play support.
So that you can be your parents’ representative with financial institutions, a legal document called a financial durable power of attorney (POA) is required. I recommend your parents’ attorney draw up and notarize this document.
There can be frustrating elements to POAs because banks and investment companies may require you to fill out their versions of a POA and have it notarized.
I suggest consolidating bank and investment accounts. Limit the number of credit card accounts to one or two. An elder may need a credit card for automatic payments for services like cable and internet. When going through their accounts, look for recurring charges for services they longer use.
You will need usernames, email addresses and passwords for online accounts. Create a master list to which you can refer.
When it comes to taxes, you’ll save yourself headaches if you hire a CPA and play a supporting role.
Some parents will let you know when they are beginning to struggle with bookkeeping. Others may not. In this case, ask questions to gauge their proficiency.
When stepping in, allow time to get up to speed. It may take a year before you feel like you have a handle on things. After all, this is not an easy job and you have not been privy to their financial past.
A big concern
We would like to think everyone is honest and trustworthy… but, as we know, that is not the case. A word of caution: Elders are prone to financial abuse from without (scam artists) and from within (family members). Sometimes adult children have a false sense of entitlement that leads them to misappropriate funds belonging to their parents. This is unethical.
A team approach can minimize the chances of financial abuse. The team should consist of an adult child who was jointly chosen by the parents and siblings, another close family member, a CPA, a financial advisor, and the family attorney. Regular reviews by the entire team (at a minimum, annually) will minimize the opportunity for irregularities.
Being responsible for your parents’ finances should teach you one lesson: The importance of keeping your own personal financial house in order. As you age, your adult children will appreciate knowing you maintain orderly records and have an updated list of key information like bank accounts, passwords, financial advisors, and so on. Keep this info accessible to your children so, when it’s time, they can render assistance to you.
MARLA BECK is the founder and president of Andelcare Inc., which provides in-home eldercare.
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