Parents' finances: When the family secret is Mom's bank balance
Conversations we loathe: Telling a spouse that it's over. Explaining sex to our kids. Asking our elderly parents about their finances. How do you broach that last subject without sounding greedy? It's an important conversation to initiate, experts say.
“It's not a question of age,” elder law attorney Danielle B. Mayoras says. “Whether you're 30, 50 or 90, no one is promised tomorrow. It's important to have these conversations sooner rather than later.”
Early in the year is a good time to start fresh, Mayoras says. She is well-versed in the subject: She co-wrote an estate planning guide, “Trial & Heirs: Famous Fortune Hunts,” with husband Andrew Mayoras, a probate lawyer. The book uses well-publicized courtroom battles to illustrate the bitter clashes that often follow the death of a parent.
You can avoid such wrenching problems by persuading your parents to plan ahead, she says. And there's no better time to start than the present.
You never know what you might find when you start asking questions. I found that my parents had more than $120,000 — a huge chunk of their savings — stashed away in a checking account drawing no interest. I talked them into visiting a financial counselor with me, and eventually my father moved the money into low-risk investments. It marked the beginning of a long-range plan that eventually kept their estate out of probate court.
“When I asked my dad if he would mind me looking into their finances, he said, ‘Oh, please do,' says Debbie, an Irvine resident who asked that I not use her last name in order to protect her parents' privacy. “I think my dad was actually relieved when I offered to help.”
But Debbie didn't have the expertise to solve the problem.
“I think there should be a required class in college called Elder Care that would help children learn how to deal with their parents' issues,” she says.
She turned to SeniorCareCounseling.com, an Orange County firm that specializes in providing financial guidance to seniors and their families. The family-owned corporation helped Debbie and her parents map out a way to pay bills and increase monthly income.
John Menzies Clark, a counselor with the group, recommends that children lobby for their parents to set up at least two things: medical power of attorney, which allows another person to make healthcare decisions if the parent can no longer speak for himself; and financial power of attorney, which allows another person to make financial or legal decisions.
Clark says a good place to start is with the medical power of attorney. He suggests the conversation go something like this: “Mom, have you set up a medical power of attorney so that I can talk with the doctor about your case?”
Another opening line might be, “Dad, heaven forbid anything should happen to you, but if it did, I'd like to be able to talk to the doctor about you.”
While it might seem calculating to plan the conversation in advance, Clark says it's preferable to the alternative.
“Most people who are referred to me are in crisis mode. Mom has fallen and broken a hip, or she's in early stages of dementia, or she just had a stroke,” Clark says. “The family is stressed. There's fighting among siblings. Mom may need skilled nursing care and they don't know how to pay for it.
“It's a lot better to have medical and financial conversations before there's a crisis.”
Some children hire Clark to do the detective work for them. Sometimes it's easier for a third party to delve into money issues.
Other times, parents want to initiate the conversation themselves, but their children shy away from the topic, Danielle Mayoras says. “Children will say, ‘No, no, we don't want to think about you dying.'”
She advises adult children to be open to the conversation. And what happens if parents won't discuss finances? What if they are clearly not able to handle their affairs, but they think they can?
“It does happen sometimes that a parent may not be willing to do a power of attorney,” Mayoras says. “If that's the case, the child can seek help from the court through a conservatorship.”
But, she cautions, “This is a last resort because the child would have to go through the probate court system.”
That can be a lengthy, costly process, and it could destroy the relationship.
FOUR KEY STEPS
Several organizations can help with estate planning. AARP, for example, has work sheets to help organize documents. Other suggestions:
1. Get professional advice about wills and trusts. Find a qualified estate planning professional who will craft a plan. Wills are simple but essential documents that everyone should have. Trusts serve more complex estate-planning needs.
2. Get other documents in place, including a letter of instruction, which lists plans or special requests, such as funeral arrangements. These instructions can help to avoid conflict over expenses among survivors. Some people also list special possessions they would like to give to loved ones.
3. Copy documents and discuss with family members. Everyone should be informed about the estate plan.
4. Review documents regularly to make sure changes aren't needed.
— Rosemary McClure
It's All Relative is our column on caring for and connecting with an aging parent. Comments: firstname.lastname@example.org.
Photo illustration: Los Angeles Times