| Sargent & Lundy Savings Investment Plan |
| TAKING OVER AN AGING PARENT'S FINANCES |
| The following excerpts are from an article in the July
1998 issue of "Retire With Money". The opinions of the author,
Pueng Vongs, may or may not reflect those of the SIP Committee.
Sidebox: Discussing financial control with an aging parent can be fraught with resentment and guilt for both of you. Dr. Mark Rubert with the University of Miami Center on Adult Development and Aging recommends meeting with other family members first. "Share your concerns and discuss a plan of action," he suggests. "You'll avoid family squabbles later over who should handle the money." Next, pick an unhurried time to chat calmly and rationally with your parent. James Birren, associate director at the Center on Aging at UCLA, suggests bringing up the subject "in a neutral context - perhaps by talking about others who are having financial difficulties. Then voice your concerns." Don't be accusatory or critical; simply offer your assistance in exploring options. Listen carefully and sympathetically to your parent. You might also include a third party such as a financial planner, doctor or friend to help with the discussion. Above all, keep your emotions in check. After that, says Birren, be patient: "Don't force matters right away. Give your parent time to think about the situation, and schedule a time to talk again." If your elderly parents no longer handle money competently, you may have to step in and take over from Mom and Dad. In this uncomfortable situation here are your options, according to legal and financial experts: Work together. If possible, confine yourself to offering assistance. "You need to assure your parents that they'll maintain control of their assets," says Neal E. Cutler, who teaches financial gerontology at Widener University in Chester, Pa. "This will ease their concerns that you're trying to take away their independence or their money." Review your parents' assets with them, and discuss any transactions that need to be made. Consider meeting with a financial planner together. Margery Schiller, a Sarasota planner, says she frequently helps clients and their adult children come to financial decisions jointly. She suggests that, with their parents' permission, children request duplicate account statements from the parents' brokerage. "The child can observe how investments are being handled but won't have trading authority until parents are ready to give it," Schiller says. To get duplicate statements from a bank, you must jointly own an account or have a durable power of attorney as described below. Take charge, with permission. If your parents let you take over, they'll need to give you a durable power of attorney or put their assets in a living trust with you as trustee to manage them. In either case, your parents must be legally competent to sign documents. A durable power of attorney empowers you to conduct all of your parents' financial transactions, such as making bank deposits and withdrawals, filing tax returns and trading investments. A lawyer will charge about $50 to $150 to draw up the document, which goes into effect as soon as it's signed. Copies must be given to each institution you deal with on your parents' behalf. Alternatively, your parents might prefer a living trust. "Unlike a durable power of attorney, which gives you broad authority over your parents' finances, a living trust spells out how the assets are to be used by the trustee and gives your parents greater protection," says estate lawyer George Smith in Greenwich, Conn. For example, a living trust can require that its income by spent only to cover your parents' daily expenses. The cost to set up a living trust for a married couple usually runs about $1,500. Take charge, without permission. If your parent is incompetent and you don't have a durable power of attorney or living trust in place, your only alternative is to become your parent's legal guardian. You'll have to file a petition for guardianship - also known as conservatorship - with your state's probate court, and in most cases you'll need a lawyer to represent you. The court will then appoint another lawyer who'll protect your parent by seeking medical advice to determine if your parent truly is incompetent and by investigating your qualifications as guardian. Be prepared: Guardianship proceedings are costly and time consuming. Your lawyer will typically charge you $2,000 to $3,500 - and costs can rise substantially if the guardianship is contested, perhaps by another family member. In many states, you'll also be responsible for the cost of the court-appointed lawyer who represents your parent. Moreover, guardianship proceedings usually last 60 to 90 days. Then, as guardian, you'll be responsible for submitting annual accounting statements to the court for the rest of your parent's life. "A court-supervised guardianship is more complicated and ultimately more prolonged than probating an estate," warns estate lawyer Paul M. Stokes in Miami. You'll have fewer headaches, he says, if you have a durable power of attorney or living trust in place, if at all possible, before your parents become disabled. |
This page updated on 6/8/98