By Diana Palmieri
I remember distinctly when my grandmother was alive; my mother and her would argue about her checkbook. My grandmother, who was 97 at the time, insisted that the balance in her checkbook was off by a couple of dollars. Then she asked my mother if all her bills were paid and finally asked if my mother was stealing money out of her account. Then my grandmother got upset and insisted my mother was taking away her dignity. They had the same argument about 10 times during my visit.
What my mother could have done differently was to try to ease these tasks away from grandma and into her watch about ten years ago. My mother never imagined my grandmother would live to the age of 100, but she did, and they fought about her finances pretty much until the day she passed.
It is very difficult to get your parents to hand over all of their financial responsibilities to you. You have to start small and make them feel that you are not treating them as children or taking something away from them.
Here are some important items to consider and discuss:
Durable Power of Attorney. If your parents do not have this valuable legal document in place and an emergency situation arose where you were forced to take over their finances, you would have to go to the state to get guardianship over them. This can be a long process. Talk to your parents today about this.
Monthly Expenses and Income. Is there still a car payment? Reverse mortgage? Property taxes? Medical bills? Credit card debt? Do they get a pension? Social Security? Do they have brokerage accounts or CDs that they receive income from?
How They Pay Their Bills. Do they pay their taxes electronically? How do they pay their medical bills, utilities, an so on?
Long-Term Health Care. Do they have long-term health care in place? If they do, find out their benefits within the plan. These benefits will include deductibles, elimination periods, daily benefits, etc. If they do not, do you know what to do in the event you have to put them in a nursing home or assisted living facility? If necessary, consult an elder care attorney to guide you through the process.
Financial Planning. Do they currently have a financial advisor that you’ve met or know of? It’s a good idea to get to know who is handling your parents’ money. That way, they know who you are in an emergency.
While these are deeply personal subjects and may not be easy to talk about, perhaps involving a trusted third party, such as a financial advisor or family friend, could help ease the discussion. If you have siblings, keep them in the loop about what’s going on. Also keep in mind that on quarter of folks over the age of 65, and half over the age of 85, have some sort of cognitive impairment. You don’t want to end up like my mother, arguing with her mother into the wee hours of the morning about an unbalanced checkbook.
The information contained in this article is not intended to constitute legal, accounting, tax, investment, consulting or other professional advice or services. For specific information that applies to your circumstances you should consult a qualified tax advisor. In accordance with IRS Circular 230 Disclosure, and to ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any tax advice contained in this article was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein.
Diana Palmieri is dually registered with Vanderbilt Securities LLC and H Beck Inc., which are unaffiliated. Securities offered through Vanderbilt Securities LLC, member SIPC/FINRA/MSRB.