Parent Finances, a Family Discussion

It’s better for parents and their children to discuss how to financially plan for later years than to wait until financial and health issues arise.  These discussions can be emotionally difficult but it is important that children and parents agree how critical matters such as housing, caregiving, estate planning, and inheritances are to be decided.

Family discussions between parents and children can often be eye opening and serve as a reality check to both the parent and children.

Should the discussions take place now or later?  Ideally, it’s best to have the conversations before any issues arise.  Try not to delay and to have these conversations sooner than later.

Areas of discussion should include…

Long-term care and housing alternatives.  Surveys indicate a small percentage of parents and children have had this conversation.  In addition, there is much misconception between parents and children of what the alternatives are and what makes the most sense.

Wills and estate planning.  A proper will and estate plan will often help to avoid the unexpected.

Income and expenses at retirement.  Parents and children often do not correctly understand what their income and expenses will be at retirement.

Guide to important documents, assets, and debts.  It’s important for loved ones to know where wills, trusts, and health directives can be found: and, a complete listing of all assets owned and debts owed should be maintained.

Financial Crimes Against the Elderly

Financial crimes affecting the elderly fall into one of two groups:  exploitation by outsiders, and financial exploitation by family members, friends, and caregivers in Rhode Island.  The aftermath can’t be understated both financially and emotionally.

Financial Exploitation and Fraud Committed by Outsiders

  • Contests and sweepstakes.  These crimes involve the elderly being notified they have won a prize and to claim the winnings they must send in money to cover taxes and other handling costs.
  • Charitable contributions.  A play on a senior’s  sympathy to help others. Often the charitable organization is a scam and non-existent.
  • Unscrupulous investment advisors.  The selling of inappropriate investment products to an elderly person with the promise of high returns.  These products often include high investment and management fees which drastically lowers the rate of returns.  Example:  A  tax-deferred annuity to a senior in a low tax bracket with current liquidity needs.
  • Contractors and repairman.  Unnecessary renovations and repairs.  The work may subsequently not be finished or involve substandard materials or workmanship requiring correction.  Examples:  Driveway re-pavement, roof repairs, kitchen and bathroom renovations, dishonest auto mechanics.
  • Telemarketing, mail, and IRS scams.  Unsolicited telephone calls and mail promising false winnings, selling fraudulent investment products, charitable giving scams, IRS scams.  The likelihood that the elderly person was so lucky to win or to have been fortunate to have been contacted is small.  The elderly person should seek to determine its authenticity and consult with others before acting.

Financial Exploitation and Fraud Committed by Family Members, Friends, and Caregivers

Unlike financial crimes committed by outsiders – family members, friends, and caregivers are often in a position of trust.  It is a sad commentary but family and friends are often the biggest perpetrators of elderly exploitation and fraud.  Often the elderly person is not aware of the manipulation and fraud committed against them due to the close ongoing relationship that exists.  The methods include:

  • Simply taking the elder’s money, jewelry, and valuables.
  • Improper use of credits cards and ATM machines.
  • Changes to wills and trust documents making the perpetrator a beneficiary or increasing a beneficiary inheritance.
  • Borrowing money and not repaying it back
  • Improper cashing and signing of pension checks, social security, and other third-party receipts.

Elderly Parent’s Money: A Case of Too Little Too Late

Children often have little knowledge of what their parent’s financial situation is.  Sometimes even the surviving spouse is left in the dark.

Poor communication often creates unintended consequences and the results can be detrimental to a surviving elderly spouse.

Studies have shown that most families recognize the importance of having an open discussion about a number of issues concerning a parent’s situation as they approach their later years.  Unfortunately, for many families, and even between spouses, this discussion never occurs and the result is not knowing how to deal with situations as they arise.

The discussions may not be pleasant, but the consequence of not knowing can be both emotionally and financially burdensome for the elderly person and their family.

How to address these problems – Framing the discussion

  • Assets – What assets exist and where are the assets located? In whose name are they in and their value?
  • Liabilities – What liabilities and debts exist? The amount owed? In whose name are they in?
  • Insurance policies. What policies exist?  The amount of coverage?  Where are the policies located?  And, are the premiums being paid?
  • As the situation changes should we consider assisted living or a nursing home? If the need arises – who should have a financial power of attorney? A need for a durable power of attorney for health care?  Does a will exist?  Is the will current?  Is there a need to create a trust and what would be the benefits of creating such a trust?

When is the timing right to begin the discussions.

Here are some helpful tips:

It’s never too early to start the discussions.  The earlier you begin the better you and your family members will be prepared.

The majority does not control.  It should be the parent who has the final say about finances and health care.

Maintain control and discipline.  Family dynamics can be troubling.  Know what roles everyone should play.

Elderly Financial Abuse

Financial fraud (aka) abuse is increasing and the elderly are the most common victims.  Here are some common causes of elder abuse and steps you can take to help someone you know.

  1. Family members: It’s distressing but children are often the most common perpetrators of financial fraud.  It often starts quite innocently when they become the responsible person over Mom or Dad finances.  In time, the child starts dipping into the accounts for their own needs.  Over time a significant amount of assets disappear.

Steps you can take:  It’s best to be transparent by having other family members stay involved.  If there are more people involved in the process you have a better system of checks and balances.

  1. Internet, telephone, mail and IRS scams:  They are becoming a daily annoyance and many are very good at conning their victims out of their money.  A caller may be asking for money for a relative in need or to stop collection on a false IRS debt.

Steps you can take:  Protect your personal information.  Never give out information over the phone.  Be very selective who you will release your social security number to.  Don’t pay out money unless a trusted friend or advisor is involved.

  1. Romance scams:  Remember, many older adults, both woman, and men, are victimized in this manner.

Steps you can take:  Be especially vigilant.  Be aware of your environment.  Try to look beyond the superficial.  Limit your use of social media.  Pursue relationships face-to-face.  Unfortunately, in this day and age, deception comes in all shapes and sizes.

  1. Caregivers financial exploitation:  This is a type of abuse that is difficult to prevent.  These caregivers range from personal care aides who provide non-medical assistance such as helping with the laundry and cooking to home health aides.  Older adults often rely on and trust in-home caregivers, and some caregivers have used that relationship to exploit their clients.

Steps you can take:  Limit a caregiver access to an older adult’s ATM or credit card. Don’t leave valuable papers open and on tables for caregivers to see.  Always have a criminal background check before hiring.