As parents age, many problems can arise among the rest of the family – and many of these centre on financial issues.
Questions include who should be in charge of money? Should Dad stop handling the family’s expenses? Does your Mum gave away money she can’t afford to? Are either of the parents beginning to suffer medically?
People in the family suddenly start to disagree about what to do and the fight is on, until the parent becomes infirm, or even loses the ability to make financial decisions for themselves. Siblings are then forced to come together to make important decisions, and often, old grievances make the process fraught, and a tough situation becomes impossible.
There are, however, steps to make this process easier.
Step one: Prevention is better than cure
If possible, ask your parents to assemble a “finance map” which covers all their bank accounts, safety deposit boxes, investments, pension plans etc. If applicable, you should also seek the name of their finance advisors.
You then have a solid base from which to work on if the time comes to handle their finances. But what if they don’t want you to?
Step two: Mediation
One good way to resolve any financial conflicts is through mediation from an unbiased third party.
When your family is willing to sit down together, mediation allows everyone the right to be involved in the decision making process.
Issues to consider include:
• Which party may give the other party money?
• Who gets to be in charge of decisions?
• How will you look after the aging parents?
• When the next in line person should take over as the trustee of the family trust?
A mediator, as a third party, can help resolve conflict and settle opposing views. It can help the family agree on issues, and restore peace. Whether you choose an attorney or a regulated financial planner, the mediator can write down the outcome as an agreement, which is written down and then becomes – by law – enforceable.
Step three: You begin to take over their finances
If it is too late for the above stages, you will need to take over your parent’s finances. As well as assembling all the details from the “finance map” mentioned above, you will need to start keeping records of everything you do. This includes keeping copies of every cheque or receipt if you pay start to pay the bills.
If you decide you want to update their investments, take advice from a regulated financial advisor and take signed notes. This will show you are handling your parent’s wealth responsibly.
At this stage, financial planners are essential to ensure you avoid common, expensive, financial mistakes.
They can outline how best to budget your parent’s wealth and also if they might outline their means. Finally, a financial advisor shows your siblings you are not just handling your parents’ financial affairs by yourself – which may go some way towards easing family tensions.