Hey mom, let's talk about money

Hey mom, let's talk about money

After a parent dies, you may need to help the surviving parent with her finances. Tread carefully.

By Dan Kadlec, Money Magazine contributing writer
September 29, 2008: 5:58 PM ET




(Money Magazine) -- My dad passed away unexpectedly last year and,
as emotionally difficult as it was to go through his things, the family
was heartened to find that Dad had quietly done us yet one more huge
favor.He left behind impeccable financial records and a one-page
letter telling exactly where to find everything. His letter was so
simple and yet so complete - and proved so invaluable - that I've filed
it away as both a keepsake and an example.Yet no matter how much
foresight Dad had, he could not see around corners. Estate-tax laws are
in constant flux. The trust he had placed the house in was out of date.
The bank stocks that made up much of his net worth - and now Mom's -
have since tumbled.My mother never had to deal with such things.
She needs advice. In that she has lots of company. According to a study
by AARP Public Policy Institute, some 34 million adults are providing
care, including financial counsel, to family or friends over age 50.Thankfully,
Mom is open to suggestions from her adult kids. Still, talking to your
parents about financial affairs is difficult for any family. Ours is no
different.As we work through the issues, I'm discovering some
useful strategies for getting her affairs in order and keeping the
peace as my siblings and I take a larger role in Mom's financial life.
These may also help with your parent recently left alone:Move slowly
You
know you have the best intentions. Even so, when you question your mom
or dad about money, your parent or siblings may see it as a grab for
control. A third of boomers who provide care or financial assistance
for an aging parent say it has created family stress. Parents and
children may even become alienated.Violet Woodhouse, a financial
planner and family-law specialist in Newport Beach, Calif., recalls a
case in which the husband passed away and the mom began spending
irrationally. The kids were advised that she might be suffering from
the early stages of dementia and moved to take control.She
accused them of putting their inheritance ahead of her needs and cut
off contact with them. Soon she was unable to pay her bills and,
estranged from her kids, wound up with a court-appointed guardian.Such
sad outcomes may spring from little more than an insensitive initial
approach, says AARP's Elinor Ginzler, co-author of "Caring for Your
Parents: The Complete Family Guide.""The conversation needs to
be, 'Mom, we are not interested in controlling your affairs. We just
want to make sure that you are in control,' " Ginzler says.Tiptoe
into the subject. Start by telling a story about someone at your office
who's going through a similar experience or show her a magazine article
like this one. If you really dread having the conversation, Ginzler
suggests, write a thoughtful letter about your concerns.Compile good records
The
first order of business for any child getting involved in a parent's
finances is to do what my dad had already done: Make a complete record
of financial assets and important documents, including account and
policy numbers, as well as the location of the key to the safe-deposit
box. You can find a sample checklist in the Solution Center at parentcaresolution.com.The
list should cover monthly bills, bank accounts, the contents of
safe-deposit boxes, retirement plans (401(k)s, IRAs, pensions and
Social Security), investment accounts, insurance policies, wills and
medical directives, plus contact information for any broker, insurance
agent, lawyer or other adviser. It's also a good idea to order a credit
report to help fill in the gaps.If any critical document such as
a will, medical directive or power of attorney doesn't exist, get your
parent to have it prepared. To make management easier, says Atlanta
elder-law attorney David Pollan, your parent should grant power of
attorney to just one child - or to an odd number so a vote can settle a
dispute. But have financial firms mail monthly checking, brokerage and
other statements to everyone so that all kids can know what's happening
without needing to ask.Collecting these materials can be time
consuming. But having these records will save you hours of agony down
the road when preparing your parent's tax return, closing out accounts
or just paying the bills. Good records also ensure that you won't
overlook hidden assets, as we might have with my dad's long-forgotten
stamp collection.While you're gathering these materials for your
parent, compile your own financial info for your survivors too. Keep it
simple, short and to the point. It's a guide, not an essay. This is not
the place to explain why the dog gets everything. For that you have a
will.Simplify finances
My
experience is typical of boomers: Dad handled the money, and he was the
first to go. That's why we kids are pitching in now and looking for
ways to simplify Mom's financial life.The first thing we did was
help her switch accounts to her name. (You need a death certificate;
get at least a dozen.) We also set up an online bill-paying system,
which will be easier than paper for Mom once she gets the hang of it
and far easier for us to help her manage from afar.Another way
to simplify life for a surviving parent: Show her how to set up monthly
automatic transfers from a retirement account to a checking account.Talking
as a family with a financial pro can also be helpful. For instance, we
arranged for the estate planner that Dad used to come to the house and
explain all the financial arrangements he'd made so there would be no
mysteries or nasty surprises. Plus, review your parent's investments to
see whether any changes are in order and help find a reputable
financial adviser if one is needed.My dad was a lifetime banker;
he loved his bank stocks. Heck, we all loved his bank stocks, which are
his main financial legacy and which he owned for so long selling them
would trigger a massive capital gain. But now we're working through the
possibilities for tax-efficient diversification - and we may need help
making a compelling case to get Mom to agree to the plan.Recognize your (lack of) rights
As
long as your parent is able to manage his or her own affairs, you have
zero right to intervene if you meet resistance. Be watchful for signs
of trouble, such as a mounting stack of unpaid bills or erratic
spending.Is she suddenly running up the credit cards or giving
in to telephone solicitors? That's your cue to step in with a
sympathetic "How can I help?" Best-case scenario, she welcomes your
offer. If not, be prepared to give examples of the behavior that has
you worried."Get your siblings on board to help make your case,"
advises Woodhouse. "But understand that you have no legal rights. If
you get nowhere, you have to let it go."Use the conversation as
a learning experience - and write your own letter so you can make sure
that your financial wishes are perfectly clear to your kids.Have you recently been hit up by a family member for a loan? Money wants to hear about it. Email us at makeover@moneymail.com,
including who the person was, how much they needed, what they needed it
for, and how you handled it. Please send along a recent photo, as well
as your location and income.



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