Women & Wealth Part 2
According to the Institute on Aging in 2016, 75% of caregivers were women. 15.7 million adult caregivers are providing care for a family member with Alzheimer’s or other dementia (Alzheimer’s Association 2015). So, while we certainly feel this topic pertains to everyone, those statistics alone made this topic perfect for our Women & Wealth series. Ed and I have dealt with situations on both ends of the spectrum from parent who refused to ever discuss finances with their children to parents who couldn’t wait to bring their children in with them for their annual reviews. Everyone is a little different and we all have our reasons, but I have watched too many people go downhill mentally with no one there to back them up to not talk about this. I have written on this topic once before in my Who’s In Your Corner post, but today’s topic is taking that a step further in helping to identify when it is time to get involved and how to properly involve yourself.
Know when to get involved. I encourage clients to get involved and in-the-know before it becomes an issue. It’s easy to say, “mom and dad are fine, they don’t need me right now,” but getting involved early gives you the opportunity to get a very clear picture of your parent’s financial needs and goals while they can still properly articulate them. Knowing that your parent’s give to a charity that is close to their hearts every December will make certain you continue that important giving in the event that they are not able to tell you about it. Getting to know their financial situation early will also help you to identify oddities that can be red flags, things like unusual purchases or out of the ordinary check writing or gifting.
Keep it transparent. Unfortunately, the majority of elder abuse is done by a family member. We don’t see it often at our level, but I have had a client call to tell me her long-lost son showed up and he was going to need $25,000 but couldn’t tell her why (don’t worry, the necessary intervention took place). For everyone’s protection, get someone else involved with you. I am one of four siblings; I can guarantee you when the time comes, I won’t be the only one making the calls on mom and dad’s accounts. The last thing you need when trying to help your parents is for anyone to have any reason to second guess your decision-making. By involving other people (the level of involvement should be appropriate for the relationship) you are helping to make certain your motives will not come into question.
Plant the seeds. Like I said before, getting involved early is better, that can be difficult, however, if your parents are resistant to your help. Start by planting small seeds such as taking interest in their charitable giving. Find out what they feel passionate about giving to and why. This is a fun and non-confrontational way to start the financial conversation. Don’t lead with, “I think we need to put my name on your bank account.” Once the door has been opened a bit, ask if you can attend their next review with their financial advisor. Use this appointment merely as a meet and greet giving you the opportunity to meet the person you parent’s already trust with their financial assets. That financial advisor may be your biggest advocate. We are always pushing our clients to get their children involved. We want to know who they are so we know who we need to talk to if something happens to their parents. They may help to encourage mom and dad to open the door to you a bit more. Taking baby steps in the beginning will help everyone slowly get comfortable with the sharing of information.
Make it legal. This step is an important one and is one that can only be done while your parents are of sound mind and able to make decisions for themselves. There are a few different ways this can be done, and it is important to have professional, legal guidance on which route is most appropriate. With our clients, we most often see the use of a power of attorney (POA). A power of attorney is a legal document giving one person (the agent or attorney-in-fact) the power to act for another person (the principal). It is important to note that the agent is required to work in the best interest of the principal. A Power of Attorney is not the only legal way to grant this authority, but it is the most common one we use. This authority cannot be granted once your parent is no longer of sound mind or has been deemed unfit to make financial and legal decisions. At that point, a court order is necessary and the process becomes much more cumbersome. Now, this is not to say that YOU must be your parent’s chosen agent. We often times see spouses first, then children, siblings or grandchildren depending on the situation. We even work with personal money managers whose job it is to represent their clients in a number of possible roles and make the day to day financial decisions for them. The most important thing is that this person is someone your parents trust to work in their best interest. While your parent is still of sound mind, they are still the authority making all financial decisions; the POA sits, unused, until needed.
Watch for red flags. Whether you are already helping your parents with their finances or you are just considering getting involved, there are a few red flags to watch for. Unusual or large purchases are a big one. With online shopping becoming more and more popular, accidental large purchases are not as uncommon as they once were. Amazon has a one-click purchase option and I’ve accidentally ordered things more times that I’d like to admit. Out of the ordinary gifting can also be a sign that something is wrong. In my experience, people often times become more generous as they age, especially if they have the means to do so, but gifting $10,000 to a “nephew” you’ve never heard of, should be cause for some questions. Piles of unread mail should also concern you, it’s possibly that means unpaid bills. And of course, just keep an eye out for any confusion surrounding their overall finances, whether that be a bill that they didn’t realize auto pays or a check they got in the mail that they weren’t expecting.
Watching the people we love age is hard for so many reasons. It’s important to remember that while it’s hard on us, it is likely hard on them as well. Be gentle. Knowing when and how to get involved can save a lot of heartache when it comes to helping. Start small and keep an eye out of any red flags, and don’t be afraid to involve their financial professional or other trusted parties to keep everyone on the same page.
Any opinions are those of Molly VanBinsbergen and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the forgoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making investment decisions and does not constitute a recommendation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
