Helping Older Parents With Finances Can Be Touchy

A few years ago during a visit to his mother, Clint happened to look at her checkbook. What he saw astounded him.

“The checkbook didn’t make any sense at all and was missing deposits,” said Clint, 62, whose mother is now 85.

“I was shocked because my mother had been vice president of a bank and had always been on the ball financially. That was one area where I never thought she’d need help,” said the man who asked that his last name not be used.

Clint’s mother’s short-term memory was failing, however, and she did need help with her finances.

Besides cleaning up her checkbook, Clint, who is a pension and financial consultant in Tustin, looked into her investments and discovered that she had money in CDs, which weren’t getting a good return. He changed these to mutual funds paying higher dividends. Eventually he gave her a checkbook for incidentals and began handling the majority of her financial affairs.

For some older adults, assistance with finances is necessary due to diminished mental capacity and health problems. Even when the adult isn’t experiencing any major problems, he or she may still need help understanding today’s complex financial world.

The most obvious choice for helping older adults with their finances is their children. But even when it’s in the family, finances are generally a touchy subject.

Children may find talking about finances with their parents more difficult than the first time their parents sat them down to discuss the birds and the bees, said Don Silver, an estate planning attorney in Brentwood who is author of “A Parent’s (and Grandparent’s) Guide to Wills & Trusts” (Adams-Hall Publishing, $11.95) and “Baby Boomer Retirement” (Adams-Hall Publishing, $9.95).

“Money is a very delicate subject that people often don’t want to talk about,” Silver said.

When well-meaning adult children step in and try to help their parents with finances, parents may become wary, Silver said. Parents may wonder, why all the sudden interest in my money?

When children bring up their parent’s estate, it’s common for the older person to wonder if the child wants to take advantage of the situation, said tax preparer and enrolled tax agent Del Schmidt, who has a tax practice in Newport Beach. Parents may also bristle at the suggestion that they are incompetent and not able to handle their financial affairs.

Some older adults also resist talking about estate planning because of superstition, Schmidt said. “People believe that once they draw up a will or make any plans they will die,” he said.

The truth is, most adult children approach their parents about finances out of concern, and usually have no ulterior motives.

“There’s not as much abuse in this area as you might think,” Schmidt said. “In most cases, the adult children are really concerned about their parents and want to make sure they’re properly taken care of financially.”

Most children want to make sure their parents will be comfortable for the rest of their lives, Silver agreed. “They don’t want to see parents lose money that they’ve worked so hard for and face an uncertain financial future after their working days are behind them.”

Many children are especially concerned--for good reason--about their parents being duped by unscrupulous thieves who prey on older adults.

“As an elderly person’s mental abilities decline, he or she becomes a good subject to be cheated by get-rich-quick-scheme con artists,” said Ronald Wiksell, an attorney in Santa Ana. A substantial part of his practice is in trusts, estate planning, litigation and probate matters.

It’s rare to make money quickly through investments, Wiksell said. “Adult children should be vigilant and protective of their parents by being leery of investment schemes that are supposed to bring in a lot of money. At this time in life, older people should be taking a conservative financial approach.”

Clint, who noticed his mother’s jumbled checkbook before any of her finances were placed in jeopardy, suggests that people check their parent’s financial affairs regularly, however.

“Look at your parent’s checkbook and make sure that it’s in order and tidy,” he said. “And watch out for unscrupulous characters trying to take advantage. Although my mother had always been sharp, and I thought she could never be taken advantage of, I can see now how it could have happened.”

John, 56, is thankful that his mother wasn’t taken advantage of in recent years. She was once an accountant and financially savvy, but a few years ago her memory began slipping. When he checked her finances, they were in a disarray.

“I can understand now how elderly people can be ripped off before their children even know about it,” said John, an outplacement counselor in Irvine, who also asked that his last name not be published. “Fortunately, she had been going to a financial adviser who wasn’t taking advantage of her. As a matter of fact, the adviser even went to her supervisor and told him my mother was in trouble.”

John’s mother, who is now 85, was suffering from the early stages of Alzheimer’s.

“She was once as sharp as a tack when it came to finances, but there was $11,000 that she had lost complete track of,” he said.

A few years ago, Hall moved his mother into a care facility a mile from his home in Irvine. At the time, he also got a power of attorney for her financial affairs and a durable power of attorney for her health care, which she readily agreed to.

At first she was able to write her own checks and pay bills, but as the disease progressed, she was no longer able to handle simple financial matters.

“She became absolutely paranoid about money and would go to the bank and tell them that the people at the home were embezzling from her,” he said. “She began closing checking accounts as fast as I could reopen them. One night I got up to 60 calls on my answering machine about her money.”

At this point, John’s mother no longer has the mental capacity to fret over her money.

“The most she asks me now is if she has enough money,” he said. “I assure her that she planned well and there is plenty.”

Problems arise when adult children don’t talk to their parents about finances.

“I strongly recommend that if you have a good relationship with your parents to communicate about financial matters before it’s too late,” Wiksell said. It’s best to plan an estate early when the older adults aren’t under the pressure of time or illness and can think more clearly.

When older adults delay taking action until they are incapacitated or take no action at all, they risk not having their estate handled as they would have liked. If, for instance, a parent dies without a will, the estate can get tied up in probate court for six months to two years. What’s left of the money is eventually equally divided among heirs.

If approaching your parents directly and discussing finances is awkward, have a third party, such as their accountant or tax expert, approach them. You can also give your parents an article or book on the subject.

Once estate plans are underway, it’s important that there is a good flow of information between siblings and their parents, so that no one is surprised and suspicious, Wiksell said.

“If a parent leaves the family business to one child, because he or she has a better head for business, that’s OK, as long as everyone is informed,” Wiksell said. Who gets what is accepted a lot better when parents are still alive and can be approached.

When they draft a will or trust, Wiksell advises his clients to give a copy to their children, if possible.

While it makes a lot of sense to monitor a parent’s finances to protect them, it’s admittedly not an easy task, Clint said.

“When you take over your parent’s finances, you take away something really powerful,” he said. “Control shouldn’t be taken away until it’s absolutely necessary.”