Contributed by: Sandra Adams, CFP®, CeFT™
As I write this, we are a couple of weeks into 2017, and already I have been involved with two client family meetings – adult children meeting with their parents about their parents estate planning and finances. I am sure this is just the tip of the iceberg for this type of meeting – and I am so thankful. Why? Because these families are planning ahead! Approaching these sometimes very difficult topics now can be the key to avoiding a very big mess later.
You might think “So, what’s the big deal? Mom and Dad seem to have things under control. They can pay their bills just fine, they seem to be financially comfortable, and I don’t want to invade their privacy and ask them too many questions about their money, so let’s leave well enough alone until we really need to get involved.”
Here are just a few of the “big deals” that could occur for those who wait until mom and dad can’t handle things (i.e. in this case, parents now are unable to handle financial affairs due to incapacity):
Parents may not remember where they hold accounts, what their account numbers are, passwords, etc.
Parents may not remember all income sources, amounts, etc. (pensions, Social Security, etc.) and may not have been reconciling checkbooks.
Parents may not have been paying bills and may not remember what bills need to be paid (you are lucky if they have bills set up for auto bill pay, as many of this generation have been uncomfortable setting this up).
Parents may or may not have a filing system and/or record keeping system that you can understand; depending on the stage of their incapacity, they may or may not be able to explain it to you.
If your parents have existing Durable Powers of Attorney (General/Financial and Medical) that give you authority to act on your behalf, you can hope that they are up to date and written broad enough instructions to be used with most financial and medical institutions.
You can hope that there aren’t too many other surprises that you didn’t expect!
My advice is always to follow the proactive planning of some of my clients, and start talking to your parents in advance of a crisis (or in advance of “that time” when parents can no longer do things themselves). Sure, it is not always the most comfortable conversation to start, but you might be surprised to find that many older adult parents find comfort in knowing that their children (1) want to be involved, (2) are interested in their well-being, and (3) know that there is a plan in place once the family meeting has taken place. Start the process of planning for your parents today! Don’t hesitate to contact me if I can be of assistance (Sandy.Adams@CenterFinPlan.com).
Sandra Adams, CFP® , CeFT™ is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Sandy Adams and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Prior to making an investment decision, please consult with your financial advisor about your individual situation.