As Your Parents Age, When Is The Right Time To Get Involved In Their Finances?

As Your Parents Age, When Is The Right Time To Get Involved In Their Finances And How Should You, the Adult Child, Start To Help Your Parents Share Their Financial Information?

For many families, talking about finances is uncomfortable – perhaps even taboo. Families are often secretive about their assets or income. This is common when children are young and parents don’t want to disclose their wealth to the kids. However, for parents who have kept the specifics of their wealth private from their adult children, when should greater disclosure begin to occur? When is the right time for an adult child to approach his or her parents about their finances?

Finances Are Complex, Start Early While Cognition Is Strong

 The ideal time to begin this conversation is while your parents’ memory is still strong — before any cognitive decline. Many affluent families have numerous accounts: trust accounts, retirement plans, pension plans located with an employer, and checking accounts. Additionally, there may be other assets such as real estate or private investments. Trying to track down these assets after parents’ memory has started to decline could be extremely difficult.

An adult child may wish to approach the subject by offering to help organize a parent’s assets. Discuss with your parents that you would like to start by making an asset inventory together.  Create a catalogue of the various accounts, locations, and names of financial professionals. Find out which accounts they use primarily to pay bills, and if they have a system set up for receiving funds from their investment accounts. Some parents may have funds automatically sent to them each month, while others prefer to call their advisor and request funds on an occasional basis.

At this point, your parents may not need your help managing their finances on a daily basis, but it is the first step in being aware of their financial picture.

When Finances Start To Become Overwhelming – Locate Power Of Attorney Documents and Pay Bills

 As parents begin to age, some tasks such as paying bills on time, keeping up with estimated tax payments, and staying on top of one’s cash flow becomes overwhelming. Tasks that parents had never previously found difficult may require their children’s assistance. This is typically the time many adult children feel the responsibility of managing parental finances on a day-to-day basis.

When this occurs, the adult child should first locate the durable power of attorney documents. Each financial institution you interact with on behalf of your parents will require the documentation. Once an adult child is listed as having power of attorney on his or her parents’ accounts, he or she can start to pay bills on their behalf, sign checks, make distributions, and review their investments. Many attorneys will also recommend that adult children document everything they do on your parents’ behalf; this practice can prevent many disputes between siblings (and other heirs) from arising.

If You’re Worried About Your Parents’ Cash Flow – Meet With A Financial Planner

 Expenses in the latter years of a person’s life can change dramatically as the cost of care increases. When this occurs, you, the adult child, should consider meeting with a financial planner who can help you manage your parents’ cash flow and analyze their probability of outliving their assets. You may need a professional to counsel you about how to budget your parent’s money and provide an objective voice for what should be cut back.

Lindsay Bourkoff, CFP® is the Director of Financial Planning at Shrier Wealth Management in Los Angeles. She can be reached at lindsay@shrierwealth.com or on Twitter @lindsaybourkoff

Steve Shrier, Zach Shrier and Lindsay Bourkoff are Registered Representatives with, and Securities and Advisory Services Offered Through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC

 Content provided is for general information only and not intended to provide specific advice or recommendations for any individual. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes.

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