A frequent challenge for children of seniors who are beginning to fail is how to help them with their finances without taking away their autonomy or getting into a tug-of-war over the issue. Concerns often arise when visiting children find that bills have not been paid, papers are in disorder, or even that utilities have been cut off. It's not unusual to find parents defrauded by predators or going on a spree on the Home Shopping Network.
All parents, children and the relationships between them come in different flavors. Some parents freely share financial information with their children and readily let them participate in bill paying and investment decisions. Others hold onto control as if their lives depended upon it -- and well it might, to the extent that they would lose their identity along with their checkbook. They may even suspect their children of wanting to take their money.
So there's no single answer for every situation. Following, however, are approaches that we have worked for many of our clients in the past:
- Offer to help with bill paying. Permit the senior to continue to control the checkbook, but schedule a monthly sit-down to go through all of the bills that have accumulated. The child can write out the checks, but permit the parent to sign them.
- Use the Internet. With on-line access to accounts, children can monitor them without stepping to take control. If unusual payments or transfers occur, children can step in quickly, rather than waiting to review monthly statements.
- Segregate accounts. Leave the senior in charge of the family checking account, but take control of investment accounts. This will leave only smaller amounts at risk, rather than the parent's entire estate.
- Make sure the parent does estate planning while competent. Through properly-executed durable powers of attorney and revocable living trusts, children can step in when needed.
- Play on parental responsibility. While it is contrary to the traditional parent-child relationship for the child to take over the parent's finances, it is consistent with such roles for the parent to take care of the child. Pitch the need to help with finances as a way to put the child's mind at ease, rather than as a response to the parent's increasing incapacity. This is something the parent can do for the child, rather than the other way around.
- If all else fails, it may be necessary for the child or children to seek court appointment as guardian or conservator over the parent's finances. While this gives them complete control, it removes the parent's right to make any financial or legal decisions. In addition, it involves legal costs, periodic reporting to the court and, in some instances, the necessity of seeking court approval for expenditures or estate and long-term care planning steps that could be carried out freely under a durable power of attorney or revocable living trust.
Just as there is no single answer for every family situation, it may be necessary to try various interventions to determine which works best. Or, one may work for a while, and then it may become necessary to take a more drastic step if the situation deteriorates.