Be Proactive When Helping Aging Parents with Their Finances

In Estate Planning, General Financial Planning, Personal Finance, Personal Financial Planning, Retirement Planning by Chip Hymiller

Let’s face it, in today’s world, managing your personal financial affairs can be complex.  There are many decisions that need to be made on a weekly or even daily basis.  For a large and growing segment of the population, who are trying to help (often unwilling) aging parents with their finances, this can be incredibly frustrating, stressful and burdensome.

What are some things that can be done to help eliminate part of the stress of assisting aging parents with their finances?  We would suggest the following actions:

Discuss the issue early.  Having a financial discussion with aging parents early, before cognitive impairments surface, can help when the time comes for you to step in and provide assistance.

Take Inventory.  It is important for you to be aware of all of your parent’s financial matters including investment accounts, bank accounts and insurance policies.  Also, ask questions that will help you understand any issues that may be relevant when making decisions, like who are the advisors or agents listed on the accounts and their contact information.

Streamline.  When it comes to financial matters, it is often better to keep things simple.  Consolidating IRAs, brokerage and mutual fund accounts, as well as bank accounts will help with the management and tracking responsibilities of these accounts.

Review important documents. Even the most open-book families may run into problems if they fail to have the proper legal documents in place.  Banks and other financial institutions are generally required to adhere to privacy rules.  This is especially true as it relates to providing information to third parties.  Having an attorney review estate documents, as well as  powers of attorney (both general and health care powers) is a critical step.

Stay involved.  Even if aging parents have the capacity to make financial decisions, it is important to remain active and engaged in their financial matters—at least on an occasional basis.  Ask if you can join them in investment-related meetings with their financial advisor.  Or periodically have financial-related discussions in a relaxed environment.  This low-key involvement, can promote an open line of communication that may prove to be helpful as time progresses.

While these suggestions may seem easier said than done, we have found that it is significantly less stressful to address financial matters with aging parents before the necessity to provide assistance arises.  For many, we have also found that parents actually want to discuss their finances with their grown children.  Stop putting it off and give it a try—you might be surprised at their reaction.