For some of us, the holiday season has meant a chance to spend time with older relatives.  It is also a time when their increasing frailty may become apparent.  Seeing someone older decline, whether it’s physical or cognitive change, is emotional.  Often these are our parents who, in our memories’ eye, were so strong and wise.  They now need our help in a way that we may not fully understand.  Relationships need to evolve to respect their needs as well as their abilities.   The handling of their financial affairs is often one of the areas most affected by age-related changes. 

Money can be an emotional minefield in families.  Each family member needs to arrive at acknowledging the health deterioration of a parent in their own time.  However, getting financial matters under control cannot necessarily wait for everyone to be on board.  One technique to navigate this minefield is to establish guiding principles for involvement in someone else’s money.  Assuming there is cognitive capacity to manage financial and legal fairs, acknowledge:

  1. It’s their money.  Even if they are not using the money or do not require all their money it is still their money.  Their wishes must be followed.
  2. Protecting dependents is a priority.  For example, an adult child with disabilities who lives with the older parent and is completely reliant on the parent for essentials including food and shelter needs to be protected if the parent is hospitalized and unable to pay any household bills.
  3. Maintaining family harmony is not the older adult’s job.  Money matters can bring out the worst in family relationships.  Transparency is needed to ensure honest and accurate handling of the money.  Some family members may have other ideas for the money or may wish to hoard information once the older adult is no longer completely in control.   Consider implementing regular family meetings to keep everyone equally informed.  If the family is unable to keep relationships harmonious at least keep it private from the older adult.  It’s no longer their issue and it shouldn’t become their worry.
  4. The older adult can, at any time, change their mind about their money.
  5. Tax planning is key.  This does not mean transferring assets to avoid future taxes or probate fees represents an appropriate solution.  Don’t let the older adult be at risk of inappropriately transferring their assets.  Work with a tax and estate professional.