Financial Help for Elderly Parents Financial Decision Making Dimin
Financial Help for Elderly Parents – Financial Decision Making – Dimin...
Broach the Subject. Start the conversation with a positive question like, "How can I help make sure that your finances are handled with your wishes in mind?" Assure them that you're looking out for their best interests. Tread Carefully. Some families find the best way to avoid family friction is to hire a certified financial planner or accountant to help.
Size Up the Situation. Ask for your parents' permission to review their bank account and investment information, insurance policies, mortgages and deeds, other loans, pension and Social Security statements. Calculate Net Worth. You and your parents should know their net worth — the difference between all their assets and all their liabilities. List all bank accounts and stock, mutual funds and bond holdings. Don't forget the contents of a safe-deposit box. It's wise to be conservative, so underestimate the value of assets and overestimate the cost of liabilities. Draft a Budget. Help your parent(s) draw up a relatively simple budget. Even if they've kept only simple records, you should be able to tell what their expenses are from old bills. Discuss what their future needs are likely to be. Plan Ahead. Talk to your parents about getting their legal affairs in order and their wishes in writing. Steps they may need to take include designing a will or other estate plans; designating a financial representative through a ; buying Medigap, life or long-term care insurance; and creating legal documents to guide future health-care decisions.
Next Steps. Talk to your parents about other steps they can take to make sure they stay financially secure. For example, they might want to consider cutting expenses, selling their home or getting government assistance. What About You? Are your ? If not, think about making plans to ease the burden on your own children. Often, whether it's out of respect for our parents or simply our own discomfort, we choose to overlook the visible signs of difficulty or "diminished capacity." They may ask the same question again and again. Perhaps their grooming habits have faltered. They may struggle to keep up with the conversation or they may have forgotten how to make that special side dish they've faithfully cooked at every holiday meal since 1956.
Without help, the cognitively impaired could quickly blow their or, worse, fall victim to artists and fraudsters. In 2010, robbed older Americans — our parents, grandparents and heroes — of an estimated $2.9 billion.
I can't emphasize enough how important it is — for your parents' sake as well as your own — to be honest with yourself as you assess the situation, and to be honest enough with your parents to offer help with managing their finances.
A few weeks ago, one of my colleagues shared a story that reminded me why we need to intervene before it's too late. As a teenager, her brother, Jim, suffered a serious brain injury in a car accident and won a settlement in an ensuing lawsuit. Their grandfather, Bob, a successful real estate investor, was named the conservator for her brother's financial affairs.
Fast-forward 15 years and Jim has recovered the vast majority of his mental abilities. The value of his , however, is another story. The family wasn't close, so the early signs of Grandpa Bob's dementia went unnoted. By the time grandpa had slipped into full-blown , he still controlled his and his grandson's financial affairs. In the ensuing chaos, he lost multiple properties to foreclosure — including the one he managed for his grandson. If you've noticed signs of mental decline, there's really no time to waste. "Financial capacity" — the ability to independently manage one's financial affairs in a manner that's consistent with self-interest — is one of the first abilities to decline. In fact, research shows that our financial decision-making abilities go steadily downhill after our 53rd birthday!
Obviously, the decline quickens when dementia is involved. One study found that nearly half of subjects with mild Alzheimer's could understand options and figure out what their returns should be. One year later, only a quarter of the group was fully capable of those same tasks. People with mild cognitive impairment may still have the capacity to designate a trusted person to act as their financial agent, and it doesn't have to involve going to court. A few simple advance planning tools — including a power of attorney, joint bank accounts and — can go a long way toward protecting a vulnerable parent.
It might feel overwhelming or inappropriate to talk to your mother or father about their situation or to offer help, but it can be one of the most caring things you ever do. In fact, consider it your holiday gift — rather than wrapping up another cheesy tie, consider giving them the much greater gift of "financial caregiving."
Jean C. Setzfand is vice president of financial security at AARP. Also of interest:
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Give Your Parents the Gift of Financial Peace of Mind
Have an open conversation about money matters with your loved ones before it' s too late
As the holidays approach, many of us will be spending more time with our and aging parents. Sometimes it's surprising to witness how much they may have declined — especially mentally — since we last saw them.Offering Financial Help
Think your aging relative needs a hand with their finances? Here's how to get started:Broach the Subject. Start the conversation with a positive question like, "How can I help make sure that your finances are handled with your wishes in mind?" Assure them that you're looking out for their best interests. Tread Carefully. Some families find the best way to avoid family friction is to hire a certified financial planner or accountant to help.
Size Up the Situation. Ask for your parents' permission to review their bank account and investment information, insurance policies, mortgages and deeds, other loans, pension and Social Security statements. Calculate Net Worth. You and your parents should know their net worth — the difference between all their assets and all their liabilities. List all bank accounts and stock, mutual funds and bond holdings. Don't forget the contents of a safe-deposit box. It's wise to be conservative, so underestimate the value of assets and overestimate the cost of liabilities. Draft a Budget. Help your parent(s) draw up a relatively simple budget. Even if they've kept only simple records, you should be able to tell what their expenses are from old bills. Discuss what their future needs are likely to be. Plan Ahead. Talk to your parents about getting their legal affairs in order and their wishes in writing. Steps they may need to take include designing a will or other estate plans; designating a financial representative through a ; buying Medigap, life or long-term care insurance; and creating legal documents to guide future health-care decisions.
Next Steps. Talk to your parents about other steps they can take to make sure they stay financially secure. For example, they might want to consider cutting expenses, selling their home or getting government assistance. What About You? Are your ? If not, think about making plans to ease the burden on your own children. Often, whether it's out of respect for our parents or simply our own discomfort, we choose to overlook the visible signs of difficulty or "diminished capacity." They may ask the same question again and again. Perhaps their grooming habits have faltered. They may struggle to keep up with the conversation or they may have forgotten how to make that special side dish they've faithfully cooked at every holiday meal since 1956.
Without help, the cognitively impaired could quickly blow their or, worse, fall victim to artists and fraudsters. In 2010, robbed older Americans — our parents, grandparents and heroes — of an estimated $2.9 billion.
I can't emphasize enough how important it is — for your parents' sake as well as your own — to be honest with yourself as you assess the situation, and to be honest enough with your parents to offer help with managing their finances.
A few weeks ago, one of my colleagues shared a story that reminded me why we need to intervene before it's too late. As a teenager, her brother, Jim, suffered a serious brain injury in a car accident and won a settlement in an ensuing lawsuit. Their grandfather, Bob, a successful real estate investor, was named the conservator for her brother's financial affairs.
Fast-forward 15 years and Jim has recovered the vast majority of his mental abilities. The value of his , however, is another story. The family wasn't close, so the early signs of Grandpa Bob's dementia went unnoted. By the time grandpa had slipped into full-blown , he still controlled his and his grandson's financial affairs. In the ensuing chaos, he lost multiple properties to foreclosure — including the one he managed for his grandson. If you've noticed signs of mental decline, there's really no time to waste. "Financial capacity" — the ability to independently manage one's financial affairs in a manner that's consistent with self-interest — is one of the first abilities to decline. In fact, research shows that our financial decision-making abilities go steadily downhill after our 53rd birthday!
Obviously, the decline quickens when dementia is involved. One study found that nearly half of subjects with mild Alzheimer's could understand options and figure out what their returns should be. One year later, only a quarter of the group was fully capable of those same tasks. People with mild cognitive impairment may still have the capacity to designate a trusted person to act as their financial agent, and it doesn't have to involve going to court. A few simple advance planning tools — including a power of attorney, joint bank accounts and — can go a long way toward protecting a vulnerable parent.
It might feel overwhelming or inappropriate to talk to your mother or father about their situation or to offer help, but it can be one of the most caring things you ever do. In fact, consider it your holiday gift — rather than wrapping up another cheesy tie, consider giving them the much greater gift of "financial caregiving."
Jean C. Setzfand is vice president of financial security at AARP. Also of interest:
Cancel You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits. Your email address is now confirmed. You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age. You can also by updating your account at anytime. You will be asked to register or log in. Cancel Offer Details Disclosures