Helping Your Aging Parents with Their Finances

One of the most difficult discussions for adult children to have with their aging parent(s) happens when it’s time for Mom and or Dad to hand over the car keys for safety reasons. More times than not, all parties don’t see eye to eye on the timing. Another equally awkward conversation between grown children and their elderly parents comes when it’s time to talk about the parents giving up control and management of the check book and their finances.

After more than 30 years of working with countless clients, I can tell you that most adult children are not comfortable bringing up the subject of finances and estate planning with their parents. I can also tell you that most seniors need a considerable amount of help getting their finances and estate plans organized, updated, and coordinated. The takeaway here is not to wait until there is a crisis at hand before addressing the subject.

The senior population has long been the target of financial con men and scammers. What may surprise many people is that a large percentage of the financial exploitation cases of seniors involve family members and people close to the senior victim. It’s not just crooked family members or evil scammers that many seniors need help looking out for. Banks and credit unions are happy to have and will say nothing to long time senior customers who have large sums of money sitting in a savings account earning close to zero percent interest on their accounts. Insurance companies also love their long-term senior customers who just keep renewing policies without ever reviewing coverage or shopping rates. That being said, it is my professional opinion that at some point by their late seventies, someone in addition to the aging senior should get involved in reviewing and maintaining the finances.

Here are a few red flags to look for that may indicate that your aging parent or loved one may need help managing and or safeguarding their finances.

·         Piles of unopened mail.

·         Unpaid bills and shutoff notices, or bills paid more than once.

·         Unusual purchases on bank or credit card statements.

·         Contributions to charities that your parents haven’t supported in the past.

·         Mail and phone solicitations that suggest your parents may have already been defrauded.

·         They continually ask the same question even though it has been answered several times.

·         They have A new friend or organization that they want to help out financially.

·         A new friend or relative is suddenly spending a lot of time with your parents.

Here is a partial list of the important documents and financial & estate information that should be located, organized, and maintained.

·         Estate planning documents (Wills, trust, durable power of attorney for finances and healthcare, healthcare directive, Living will, DNR(s).)

·         Birth certificate(s), marriage certificate(s), death certificate(s), divorce decree(s), Social security card(s), Medicare card(s), Military discharge papers and separation documents.

·         Copies of all real estate deeds and current property tax statements

·         Retirement and pension papers (survivor benefit information)

·         Recent statement for each and every bank account, investment account, IRA, etc.

·         Bank/CU Checks, debit cards, credit cards, mortgage/loan documents

·         Auto loans, auto lease agreement, auto title(s) and registration, insurance, etc.

·         Boat, RV, ATV, motorcycle, snowmobile, trailer, firearm, etc. title(s) and registrations.

·         All property & casualty, life insurance and annuities policies and recent statements.

·         Safe deposit box info and key. Check to see who can access the box after death.

·         Tax records (past 7 years)

·         A complete contact list of all service providers and professionals that they work with.

·         And more…

Here is a partial list of other important financial information that should be checked on and maintained over time.

·         Do all bank, credit union and investment accounts have named (pay on death) primary and secondary beneficiaries and are those beneficiary choices in alignment with and coordinated with the estate plan?

·         Are there joint accounts? Are those joint accounts in alignment with the estate plan?

·         Do all banks, credit unions and financial institutions have copies of the DPOA for finances, trust documents, etc. Do they require their own documents?

·         Do all life insurance policies have primary and secondary beneficiaries and are those beneficiary choices in alignment with and coordinated with the estate plan?

·         If there is a revocable living trust, is the trust properly funded?

·         What income is coming into the household? How? When?

·         What bills are due and when? Is there a detailed written budget for running the household?

·         Are there personal financial statements? (Personal balance sheet, cashflow statement)

Getting a person’s finances organized and properly coordinated with their estate plan is a big job and requires a significant investment of time and energy. A challenge for many family members is the fact that much of the work that needs to be done such as making calls to banks, credit unions, insurance companies, etc. must be done during the work week. With only so many paid days off and family commitments of their own, many adult children find it overwhelming to complete the project on their own.

A solution for many families, especially those who live out of town from their loved one is to hire a professional Daily Money Manager (DMM) to step in and take on or complete the job. Once everything is organized and coordinated the DMM can hand it back over to a family member to manage and maintain or at the family’s request the DMM can provide those on-going services as well. To locate a qualified DMM in your area you can visit the American Association of Daily Money Managers (AADM) website at www.aadmm . In the state of Michigan you can reach out to my firm at www.mmifinancialgroup.com .

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Todd W. Meyer is one of the principals at MMI Financial Group, Inc. He has 38 years of experience working with clients and personally heads the Daily Money Management & Financial Concierge Services department of the firm. Todd is an active member of the American Association of Daily Money Managers (AADMM). Todd can be contacted at todd@mmifinancialgroup.com

 

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Why families don't talk about money or estate planning decisions.

I've been working with senior clients for the past 31 years, first as an insurance and financial services agent, and for the past 20 years as a financial planner and daily money manager (DMM).  The one common denominator that I have seen among families is a lack of communication about finances and estate settlement decisions between senior parents and their adult children.

As we, or our parents reach retirement age and become seniors, why is it so difficult to talk openly about finances and estate settlement wishes with the family?  Seniors think about the possibility of becoming dependent upon family members, or worse, ending up in an assisted living facility.  Adult children are keenly aware that if something happens to their senior parent(s) someone would need to step in and manage the finances or settle the estate.  Here's where it gets tricky.  My professional experience has been that Mom and/or Dad are not taking the lead and proactively communicating their personal information and wishes with the kids - they just don't want to think or talk about it.  I've also been told countless times by adult children that none of the kids want to be the first to bring the topic up for discussion for fear of being seen as "a little too interested in what their inheritance may be."  Now throw blended families into the mix, and of course a little (or a lot of) dysfunction and believe me, nobody wants to bring up the issues that everybody knows really need to be discussed. 

So how do families overcome these communication issues?  Sometimes getting outside help can make all the difference.  I've found as a professional daily money manager that my senior clients have no problem disclosing all of their confidential information to me; in fact, they like the fact that someone other than themselves has a complete record of everything.  For many clients their greatest fear is that the kids will fight over financial decisions or the estate settlement wishes.  Having someone outside the family to assist their loved ones in managing the estate and carrying out their estate settlement wishes gives them peace of mind.

My best advice is to bring all family members together to proactively discuss the financial and estate settlement details long before any issues come up.  Decide as a family how you will proceed going forward and who will play what role.  Discuss whether or not you want professionals to be involved to provide services or if you will try to handle everything inside the family.  If family members are going to provide services, what should their compensation be for providing such services?  What checks and balance process will be used to assure finances are being managed appropriately?  More often than not providing oversight and care will fall on one person rather than being divided evenly among all of the siblings.  Get everything worked out in advance.  Maintain an open line of communication and review the game plan periodically to keep things current.