We will all encounter the same unavoidable difficult moments/events; it’s a simple fact of life. Whether it’s the loss of a friend or family member, separation/divorce, or our parents’ aging, life will throw these challenges our way. While we cannot control what happens to us, we can control how to prepare for the inevitabilities.
As a family financial planner, I often find myself guiding my clients through the difficulties of aging parents and helping sons and daughters understand what needs to be done to protect the generational wealth built over decades. I stress that awareness/understanding is the best safeguard for protecting not only our elderly parents’ assets but their dignity and freedom of choice.
Protecting Elderly Parent’s Assets – Awareness is Paramount
There’s no chance of avoiding future financial pitfalls unless you and all necessary parties are aware of your aging parent’s assets and financial standings. Awareness is key, and many people lack any visibility of their aging parent’s financial situation. There’s no shame in asking difficult questions and starting with the basics; procrastination exacerbates difficult situations and even creates unnecessary problems. When it comes time to reconcile what is known versus unknown, I’ll have my clients follow a checklist to go through with their parents. Some of the questions on that list include:
- Is there any wealth preservation or asset management system already in place?
Sometimes, parents will have a well-structured asset management system in place, but their children aren’t unaware of it. While this is not commonplace, some parents do not want to “burden” their children by involving them in these processes, but when they pass, the children are blindsided by the transference protocols put in place.
The children/beneficiaries may not fully understand the parents’ wishes and all the complexities involved; they might not agree with which assets they got versus their siblings. It is best to have these conversations while everyone is around so the desires/intentions as understood by all. The goal is to avoid a family fight without the referee(s) available to keep everyone in check.
- Where are the documents?
I’ve spent countless hours helping clients sift through files and folders in basements, attics, and studies, looking for financial and inheritance documentation after the aging parents are either in deteriorated mental state or have passed on; this is an awful situation that can be avoided by simply asking the questions before it’s too late. Whether physical documentation or secure digital files, ensure the location(s) and accesses are all known well in advance.
- Do they have legal representation?
This may come as a surprise, but sometimes the legal stewardship representing the family does not initiate a conversation with the kids or other beneficiaries until after the funeral. There’s no good reason for adult children not to have at least one or more conversations with their parent’s attorney before their death. I have seen countless trusts that were never executed or funded. The future trustee must understand their role; lawyers draw upon the paperwork, and it is up to YOU to implement it.
- Is the estate plan up to date?
Wills, trusts, beneficiary designations, and so forth; there are many moving parts to a complete estate plan, but is it all up to date? If the estate plan has not been updated in decades, it doesn’t help anyone and leaves a big mess to sort out after the fact. Things change, and the estate plan has to account for these changes; spouses pass away, marriages end, and bankruptcies happen.
- Are they being taken advantage of?
It’s a difficult reality for many to face, but the elderly are often taken advantage of, and it can happen to anyone’s parent’s at any time. From contractors to sales representatives and even legal councils, there are those willing to scam those most vulnerable and trusting.
As children, we all picture our parents as invincible caregivers who cannot be duped, but as they age, they risk becoming targets. Being aware of the parties with access to your parent’s assets and finances is the way to mitigate the chances of any wrongdoing.
Even if they are not being taken advantage of, they might be wasting funds without realizing it. Review their benefits so issues can be caught before more money is lost.
Here are some quick examples:
- I have witnessed a client’s mother pay $500+ monthly for Medicare coverage they were entitled to get for free!
- A common mistake is paying for that $250 monthly cable service package when all the parents do is watch PBS and NESN!
Help is Available
As a financial advisor in Boston and on the North Shore, I’ve witnessed all types of familial situations, including caring for aging parents’ finances and helping transition leave-on assets. Strong financial foundations are not built overnight, so it’s expected that transferring those foundations from one generation to the next is not a cakewalk, but with the right guidance and helping hands, it can be done smoothly without error or missed opportunity.
When I work with multiple generations of a family, from grandparents to grandchildren, I’m entrusted with the future well-being of many individuals. That fact is not lost on me – I take it to heart.
If you have any questions or concerns about protecting your elderly parent’s assets, please don’t hesitate to reach out.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Thrive Wealth Strategies and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.
