Caring for your elderly parents financially
It is a sad story which touches so many Australian families. Caring for elderly parents who are finding it difficult, or incapable, of looking after themselves financially. Responsibility invariably falls to the children, which can often cause friction within the family.
We were recently approached by a Sunrise viewer in this predicament who was desperate for some guidance. Gwen’s 80 year old widowed father had entered a nursing home. The house had just been sold for $400,000 and she had no idea what to do with the money or how to organise her father’s finances.
She is one of 3 daughters and the problem was starting to cause dissent within the family at a very emotional time. Each child had a view on what should be done, but their suggestions were all very different as they took their own individual counsel from spouses and friends. As people continue to live longer, caring for elderly parents is becoming an even bigger commitment for every child.
MAKING IT WORK IN YOUR FAMILY
We know it can be an uncomfortable situation, but the key to caring for elderly parents is to find out as much about their financial affairs before a crisis occurs. That terrible middle of the night phone call carrying news of a catastrophe can be a nightmare if preparations have not been made.
. do your parents have legal documents and do you know where they are located?
. where are the bank accounts and who do your parents rely on for advice?
. what are their other investments and are they held jointly or separately?
The first step is to discuss the issue with your parents as early as possible. It can be an uncomfortable situation as no parent wants to face the problems of old age and no parent wants to feel as though their children are putting them out to pasture.
Try to relate the argument to other families which have been split because of the lack of preparation for a sudden crisis with a parent. Everyone can recall a story of a friend or relative where the dominant financial partner dies, leaving the surviving spouse with no idea of their financial situation. Emphasise to your parents that your enquiries are not being made by a gold digging child but by a family concerned about caring for their parents in the best possible way.
Ask to meet your parent’s bank manager. Make sure your parents organise the meeting and make the introductions. At the same time, sign an authorisation which allows the banker to talk to you about their accounts. This means the bank will be comfortable in keeping you up-to-date with your parent’s accounts and can provide an early warning system if irregularities start to appear.
If you live far away from your parents, find someone who can help locally. Convince your parents to maybe settle in to a retirement village sooner rather than later because the longer they leave it, the harder it will be to settle in. Your parent’s church minister may also be able to recommend a trustworthy helper if your parents are more independent.
THE IMPORTANCE OF A POWER OF ATTORNEY
Some parents can be reluctant to share financial information with grown children because they are fearful of giving up their independence. But if something happens to them unexpectedly, they may not be able to give you legal authority to act on their behalf.
So it is critical a power of attorney is arranged to enable you, a friend, relative or solicitor to take control of your parent’s finances when needed. It is not a pleasant thought but one which must not be neglected. This is the most important document of all, it’s the one that will let you help your parents if help is needed.
A power of attorney allows one person to give another specific authority to handle financial affairs. Even if you never need to fully implement it, it will allow you to take smaller steps such as clearing up credit card problems.
A power of attorney can be limited to a designated piece of real estate or it can cover all financial transactions. Your parents don’t have to be incapacitated to need a power of attorney either, they may just need someone to look after their affairs if they go away for an extended period.
A power of attorney empowers one person or party to act on their behalf, taking into account any wishes conveyed to them. However, an important point is that the capacity of a person must be taken into account at the time they execute the power of attorney. Many people only think of a power of attorney at the first sign of mental deterioration. This is really too late.