Be Smart When Helping Your Parent with Her Finances

Written by Clark Allison | Mar 14, 2024 4:33:52 PM

Helping your elderly parent with her finances can be a double-edged sword. You are willing to step up to help; after all, it's your mom. And you may have more time and skills to help than your siblings. But you must be mindful and disciplined in your efforts.

Let's say your mom needs help paying her bills. Obviously you need her to ask you to help. From there, you should ensure your siblings know you are helping. Transparency and communication are very important. In a perfect world, they will be happy you are willing to help so they don't have to.

Unfortunately, we've seen many cases where no good deed goes unpunished, as the saying goes. A child who is willing to stick her neck out and help can be criticized and falsely accused of taking advantage of mom by another sibling— the same sibling who is unwilling to help. Therefore, to protect yourself, keep good records so that, if needed, you can show what you've done with the money.

We had a case where the father appointed his only child's ex-wife as his successor trustee of his living trust and as agent of his durable power of attorney. The father didn't appreciate the fact that 20 years after the divorce, his son still felt jealous of his ex-wife. (BTW we did not write this living trust. It's generally not a good idea for a client's son's ex to be a trustee if the son still hates her. Even if the ex-wife is a CPA and very qualified to handle the finances, the estate planning attorney and the client should have read the room and paid attention to the family dynamics.)

When the father became incapacitated, his ex-daughter-in-law took care of him and paid his bills as the successor trustee and agent of his durable power of attorney. This went on for five years until the father died.

During the trust administration, the result of which the son and his daughter were to receive the bulk of his father's estate, the son hired an attorney to scrutinize his ex-wife's handling of his father's finances for the five years before his death. This slowed the trust administration to a grinding halt, generating more attorney and accountant fees, and it almost went to court.

One year later, after creating the hullabaloo because of his still burning spite against his ex-wife, the son conceded that the ex-wife did a good and honorable job helping his father. The son did not get the pound of flesh he sought; instead, he looked like a fool, which cost him attorney and accountant fees and delayed the distribution of the estate by one year.

This is a crazy case and certainly not the norm, but if you are willing to step in to help your elderly parent with her finances, make sure your siblings are on board, communicate often, and keep good records.

View full post