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Managing Money for Mom

By Amy A. Brandts, CLU, ChFC

Your mom seems a bit more forgetful lately. Perhaps she’s OK for now; but how will you be able to tell when she does need help managing her finances? Like most in her generation, she is proud of her ability to manage on her own and is resistant to admitting that things are a little harder for her now.

Don’t wait to bring up this touchy subject, but approach it with tact. Ask whether her pension and social security are enough to cover her expenses. The conversation may be awkward at first, but chances are, she will be relieved you brought it up. Making some simple arrangements now, while she’s still relatively healthy, is far easier than the challenges of responding to a sudden crisis.

Make a List
What questions do you need to ask? Will you need to know specifics about her income and expenses, as well as the value of her assets and her debts? Make a list of:

• Pension income, social security and military pensions, including spousal benefits
• All bank account values
• Safety deposit box contents, location and key
• Investment account values
• Credit card or other debt
•  Expenses – scrutinize these carefully for unnecessary expenditures

Check it Twice
Watch for those Red Flags – frequent transfers from savings to checking, disconnect notices from utility companies, overdue bills, threatening letters from banks or collection agencies. Also watch for inappropriately large or frequent charitable contributions. These are the most serious signs that she needs your help. More subtle signs can include missed doctor’s appointments, multiple magazine subscriptions or being susceptible to overzealous salespeople. Immediately consult a physician if you suspect depression, substance abuse or dementia – all of which can affect spending habits and result in a variety of other behaviors that can significantly impact finances, as well as general health and well being.

Where is she now?
You need to find out whether she has enough to live on now, whether her money is being managed well and if she is getting an appropriate return on her investments, given her age and income need. Find out if she has long term care insurance that might be available to help pay caregiver expenses, should she need them. Also, does she have health problems that affect her ability to manage money now or might it affect her in the future?

Professional Resources:

• A financial planner for comprehensive financial help, including diversification of assets, insurance questions or an income/expense analysis
• A geriatric care consultant or social worker – to review safety and living arrangements and coordinate care providers
• An attorney – for wills, trusts, power of attorney, advanced medical directives and living wills
• Accountants – for tax preparation and planning

How do you prepare for the future?
First it helps to simplify things. Consolidate accounts and have pension, social security and other income delivered by direct deposit. Have routine bills, such as mortgage payments, insurance and utility bills paid automatically out of a single account. This reduces trips to the bank and assures payment of critical expenses.

Choose someone to have signing authority (as power of attorney) on her accounts. This could be you, another sibling or a trusted third party. This gives you the ability to write checks, pay bills and sell assets as needed. This can be accomplished with a Durable Power of Attorney, a document drafted by a lawyer, however, many investment firms also have their own power of attorney forms they prefer you to use and are specific to their accounts.

Avoid the common mistake of listing yourself as joint owner on her accounts. While a joint account is easier to establish, it is subject to risks. If you are the joint owner, your creditors could attempt to attach those assets to pay your debts, or your estranged spouse could claim that the account was part of your marital assets.

Remember that managing money for an older person requires different investment strategies than for someone of your own generation. Your most important goal is to make certain that she has adequate income to meet her changing needs and doesn’t run out of money. Don’t let your financial decisions be unduly influenced by the concerns of heirs over future inheritances.

Consult her doctor if you have any concerns about physical health or safety. Have her sign a medical release, authorizing her doctor to share her medical information with you.

Create a “Document Locator List” and write down the location of all the pertinent legal documents such as: original will, trust documents, powers of attorney, location of safety deposit boxes, names and numbers for all bank and investment accounts and any other written instructions indicating her desires in the event of an emergency.

What does her future hold?
Well clearly, no one can predict the future. But the best gift you can give your mom is allowing her to age with dignity. This means helping her maintain the highest level of independence that she can and understanding her wishes. It also means recognizing that there may be a time when she can’t manage alone and easing her adjustment to this by gracefully accepting it and planning for it.

Amy Brandts is a financial planner and founder of Symphony Financial, an independent fee-based financial planning firm in Herndon, VA. She specializes in working with the "Sandwich Generation," those who are sandwiched between the needs of their children and their elderly parents. To reach Amy, call 703-481-9876 or email her at abrandts@symphonyfinancial.net.
 

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