By Eve Kaplan
What should you do when your aging parents’ financial problems become your problems? This is one of the most ticklish and emotionally complex challenges I face as an advisor.
We Americans are notoriously private about financial matters; it’s common for adult children and parents to share very little in the way of financial information.
This kind of privacy can come back to bite us, however, when issues our aging parents face are shifted to our shoulders. Here are two examples, involving people I know, of how adult children tackled these issues:
Janice and her mother, Joy.
Janice’s mother, Joy, is in her early 80s. Janice’s father passed away several years ago. Both parents grew up in the Great Depression and led relatively frugal lives. Joy remains fiercely independent and still lives in the same suburban home her parents bought 50 years ago. Janice never inquired about her mother’s financial well-being, and her mother never would have shared any information, anyway, believing that money matters are “private.”
This situation worked well until her mother called her one day, out of the blue, and asked for a substantial loan, promising to repay it in a few months. This alarmed Janice.
After Janice dug more deeply into the situation, Joy reluctantly confessed she’d been approached by phone several months ago by a man she now considers to be “a friend.” She enjoyed speaking with him daily. After gaining Joy’s confidence, this friend began to ask for money to help him out of a “tight financial situation.” Over several months, Joy mailed him a total of $18,000 in checks.
Joy felt like a complete fool when Janice pried the information out of her and told her a scam artist had been victimizing her. Janice wasn’t able to determine the extent of Joy’s problem since Joy alluded to certificates of deposit and other assets but wouldn’t share the information with her daughter.
The daughter located a financial advisor to assess her mom’s situation. Janice paid the advisor on behalf of her mother but understood their discussions would have to be confidential, since Joy otherwise wouldn’t agree to any meetings.
Over a period of weeks, the advisor made suggestions to Joy on how best to deal with the situation. Although the advisor didn’t share particulars with Janice, he indicated he was successful in terminating Joy’s contact with this scam artist.
Joy is doing better now. She’s agreed to allow her daughter to help her review her checking account statement each month so Janice can spot any issues before they get serious.
Fred and his parents.
Fred and Dora are in their 40s. Fred’s parents, who are in their late 70s, are financially comfortable and in relatively good health. There is little exchange of financial information between Fred and Dora and his parents.
But it’s clear that longevity is in their family, and Fred is concerned that his parents won’t always be in a comfortable financial situation. His parents don’t trust advisors and have been reluctant to seek advice for decades.
Fred convinces them to meet me on condition that I protect their privacy. The parents tell me they have charitable intent and also want to give part of their future estate to Fred and his sister. Our talks reveal that their estate documents are more than 20 years old and they’re concerned about having enough money to cover long-term care if both of them need it. They’ve seen friends spend down their entire retirement savings to cover this care.
Fred’s parents don’t have any financial problems now, but that could change if they live into their 80s and 90s. Fortunately, I’m able to work with them and an estate attorney to draw up new, relevant estate documents. We also discuss if long-term care insurance makes sense or not at this late date.
While Fred and Dora are not directly involved in any way, they’re satisfied that several sets of objective eyes (estate attorney, insurance agent, elder-care lawyer) are reviewing his parents’ situation to avoid severe planning gaps down the road. The younger couple obviously stand to benefit from this, as prospective beneficiaries of a portion of his parents’ estate, yet their motive is to make sure his parents don’t make costly financial mistakes that come back to plague them.
Financial planning isn’t always a family affair, but my clients, whether parents or children, benefit from the process. As an advisor, I want to be there to deflect any potential threats to my clients’ well-being down the road. Bringing a financial planner into the picture with an objective viewpoint can be a win-win for all generations concerned.
ABOUT THE WRITER
Eve Kaplan is a fee-only advisor in Berkeley Heights, N.J. She writes for AdviceIQ, which delivers quality personal finance articles by both financial advisors and AdviceIQ editors.