Taking Over Your Parents’ Estate Gracefully

5
209

Taking over your parents’ estate can be a very stressful time. Firstly, you are reconciling with the fact that your parents are functioning at a lower level, which can be distressing. And secondly, their accounts can be unorganized and difficult to access. This week we want to learn more about how to take over the estates of our elderly parents in a respectful, legal, and efficient manner.

If a parent becomes incapacitated, it is usually their children who are expected to step up to the plate and handle their finances. But we are finding out that most families are not prepared for such a situation. We want to learn how best to handle this situation, and what legal steps can be taken before such a situation occurs.

We look to our legal resource network to learn more:

How should you prepare to take over your elderly parents’ estate?

How can you help them prepare their wills and get their estate in order respectfully?

Do you need to be named Durable Power of Attorney (POA) to access their accounts?

What information do you need to be prepared to take care of your parents’ finances?

We look forward to learning more about this sensitive topic.

Please post your answers in the comment field below!

5 COMMENTS

  1. Arthur L. (Tim) Clements III of Nicola, Gudbranson & Cooper LLC says the first step is to let your parents know that you are concerned about what to do if something were to happen to them. Don’t pry about finances, but ask your parents if they have done any estate planning and, if so, whether they have wills, a trust and powers of attorney. If they have taken these steps, get contact information for their lawyer for future use. Ask your parents for more details about the documents: Is there a living will, a health care power of attorney, a durable power of attorney? What do the documents say about who in the family has what responsibilities? If they’ve made no plans, suggest that they work with an estate planning attorney to prepare the necessary documents, Clements advises.

    Broaching the topic can be “very tricky. It’s really a case-by-case situation. But you need to figure out a way to start the conversation,” Clements said. “Doctors can be helpful in starting the conversation when a parent is beginning to struggle with driving and other daily activities.”

    Once you start working with your parents on these matters, “the tricky issue is what to do if you have siblings. I would urge transparency with your siblings while considering the practicalities — such as who lives near your parents and is in the best position to help them with medical issues, financial issues, etc., as opposed to living out of town,” he said.

    You need a durable power of attorney to access your parents’ accounts. “But even with a durable power of attorney, be respectful and ease into your new role for a parent whose health is declining,” Clements said. “For example, you might write the checks for them, but let them sign the checks after showing them the bills.”

    To take care of your parents’ finances, you need to know their assets, liabilities, income and expenses. If you don’t have this information, look at a recent tax return to identify sources of income and collect their mail for at least three months to find out about bills, income, bank and brokerage accounts and taxes, Clements advises. And with so many more people banking online, he said, be sure to identify user names and passwords where appropriate.

  2. How can you help them prepare their wills and get their estate in order respectfully?
    It’s very difficult to get parents to face their mortality. They often feel threatened that somehow granting a child powers over their financial or physical person is a loss of control. As we age, maintaining control over our life is the biggest struggle. Physical control is starting to wane with illness and deteriorating muscles and bone density. Mental control is often frustrated with memory losses or lack of clarity, especially under pressure. So financial control is the only thing they actually have left in their hands. Fear of losing that control can make parents suspicious of anyone who wants to take that decision making power away. A direct request to handle financial affairs from a child can often be misunderstood as an attempt to personally benefit from their financial stockpile, a threat to their financial stability or impatience to inherit their estate.
    Yet monitoring and preparation is critical when the aging population is vulnerable to caregivers to whom they feel the need to ingratiate themselves for better care or vulnerability to financial predators who are incredibly aggressive through phone calls, pressuring them to send money for various scams and reasons. With the advent of Google maps and satellite visuals, predators can now see the elderly person’s house down to the front door keyhole. So as our parents age, it is increasingly important to ease them in to a co-management situation whereby you receive copies of bank statements or other investments so their financial activities can be at least monitored. Explain that the added security of having a second pair of eyes insures there isn’t any identity theft or mistakes being made. No one can look at every statement the moment it arrives so two sets of eyes are better than one to spot mistakes. Once dual copies are in place, start small conversations about the investments. Ask questions and seek their advice and input on how and why the investments were made. Don’t try to tell them they are doing something wrong even if you think they may be. If you see something that concerns you, tell the broker instead. That way there will be a record of a concern and the broker will be on notice that someone else is watching for mistakes, inappropriate investments and churning of accounts. Parents love teaching so engaging to learn makes the conversations easier down the road if you see decisions are being made that may hurt their financial position.
    The best way to encourage parents to prepare is by example. If there’s a horror story from their social circle about dying intestate or with a will but without a trust so the tax and time caused catastrophic results for the spouse and/or decedent’s family, talk about it. If their own parent’s death caused problems, discuss it. The best is often reminding them that their spouse’s financial stability could be compromised and if they’re gone, they won’t be around to take care of it. The combination of example and the reality that it can happen to their own family often helps make the need for preparation more of an urgent reality.
    The other way to broach the subject is to let them know that you want to be sure that their wishes are respected if they were to get sick. Give them examples of whether they’d want to stay in their home, whether they’d want to be kept artificially alive, if they’d like to be at home if they have a terminal illness, would they want to be cremated or buried and where, etc. This psychologically makes them feel there are decisions they need to make to stay in control of their lives if they aren’t able to make the decisions later. It makes taking the step of drafting a will or trust far more attractive. Drafting a Power of Attorney for Medical Decisions is a short jump from drafting a Power of Attorney for Financial Affairs and both are most often contained in the same document. So entering through one door may enable you to go through the other.
    If you meet with great resistance, I’d suggest taking yourself out of the mix and at least get them to consider a will or trust that puts the control into the hands of a few independent parties with a fiduciary duty to protect and administer their assets. Even the least expensive online solutions like LegalZoom can offer wills or trusts that comport with specific state laws. Once that initial step is taken, the next step to adjust or amend it with a legal estate professional can be more easily broached and the procedure refined to a more appropriate solution with time.
    Do you need to be named Durable Power of Attorney (POA) to access their accounts?
    To access bank accounts you will need to provide the bank a document that gives you the power to access their accounts. This can be a Durable Power of Attorney, a document that adds you to the account as a joint account holder, something to demonstrate that you have a beneficial interest in the account (rights of survivorship) if something were to happen to them. The documents vary depending on State, situation and institution but simply paying a visit to the specific bank(s) should provide the form and substance of what is needed for this contingency.
    What information do you need to be prepared to take care of your parents’ finances?
    Ideally to take over parents finances you need serious investment savvy or a relationship with a very good financial manager. You are under a fiduciary obligation to be a good manager of their finances and there are offices in the government that will investigate complaints of people not managing the financial affairs of the elderly appropriately. So take this job seriously and ideally have an accountant or investment professional make decisions with you. You will certainly need knowledge of where everything is and what form it takes (ie cash, stock, bonds, life insurance, safe deposit boxes, etc.) For investment accounts, confirm what the registration cards said when the investments were made and insure that the investment goals have not changed. For instance, a person may have checked off ‘aggressive growth’ investments 20 years ago when they opened a brokerage account but now that they’re older, their appropriate risk tolerance may shift to ‘cash preservation.” So update their registration cards with brokerage firms if necessary. Find out what the start and end dates of bonds, if they automatically roll over, the decision making period for that rollover, what that investment pays and if it’s competitive with other market options. If they are holding a five or ten year bond that automatically rolls over one month prior to expiration, then you may want to liquidate that long term investment if their life expectancy is shorter than the expected maturation date of the investment or if the funds are projected to be necessary for their care. Understanding the mix of investments is critical. If they have stocks, check what the companies actually do and measure the attractiveness of that stock in light of today’s changing world of technological advancement. Sometimes stocks sit in an account for 30 years without movement which may or may not be good to maintain in today’s economic climate and with their new financial goals. Ideally the mix is balanced with an emphasis on cash preservation.
    You should also identify what items will be necessary to pay moving forward. If the person is in their same living situation with caregivers, then there’s water, power, phone, mortgages, taxes, medical insurance, life insurance, medical expenses like medicine and medical equipment, caregivers, food, etc. I used Amazon to deliver items like Insure, diapers and groceries to my Aunt’s home to take the power away from the caregivers who can often abuse the credit card or check writing role. I kept a positive balance in the accounts with the utilities in case bills were not received in a timely manner so nothing would be compromised. If they’re in an assisted living facility, they have a system for billing and what it covers. The one thing I would keep my eye on in this instance is medical insurance premiums and life insurance premiums. Insurance companies are notorious for not sending bills and then cancelling insurance for the elderly. Stay on top of that and set up auto debits for critical payments that can’t be missed. It’s also critically important to understand their wishes and try to maintain as much consistency in their life as possible. Oftentimes when people age, their long term memory increases and short term memory decreases. So if they’ve lived in the same house for 40 years, changing that environment can cause significant and unnecessary fear and panic. Try to keep the things around them that have comforted them for many years that are memorable and recognizable. That will go a long way to making their later years peaceful and they will be able to maintain their dignity as they age. They will also be less resistant and fearful to a smooth transition of the management of their financial affairs.

  3. I’m a financial adviser in Northern Virginia with a fairly broad client
    base, including a number of elderly clients and “middle aged” clients who
    are dealing with aging parents.

    In general, assuming a trusting relationship b/w parent and child, it can
    be very helpful to have the parent grant the child a durable power of
    attorney. In addition, a revocable living trust with the child as
    co-Trustee is also helpful, both during the parents’ lifetime (and
    potential complete or partial incapacity) as well as for estate
    administration.

    With so much being digitally accessible, it’s now easy for a child to
    access a parent’s financial accounts via the internet, which allows them to
    monitor them for unusual activity, or for online bill-paying. It’s also a
    less intrusive first step to helping one’s parents with their finances:
    rather than taking over the finances altogether, it allows visibility while
    the parent continues to manage the finances him/herself.

  4. 1 How should you prepare to take over your elderly parents’ estate?

    Taking over is a strong term. I prefer to say assisting an older adult with
    managing his or her estate. This is more
    respectful. I suggest opening the conversation by asking the older adult a
    question such as – “Mom or Dad we just went to consult with a lawyer about
    getting our legal affairs in order. We did this because we realize that bad
    things can happen and no one has crystal ball. Boy is this stuff
    complicated. It would help us if you told us what you did.” This is non
    threatening way to open this topic without appearing nosy and minimize any
    stress. Also by asking this question you will learn if Mom or Dad had any
    legal papers drafted such as a Will Durable Power of Attorney, Living Will,
    Health Care Proxy, HIPPA Release or Trust. You will also learn how Mom or
    Dad feel about such planning documents and whom they want to handle their
    affairs. Once you have gleaned this information you can offer to help them
    create a plan or update/modify an existing plan. Remember no one wakes up
    one morning saying today I need to create my estate plan toady

    As regards disorganized documents, offer to help your parents to organize.
    Offer to do research on line in order to find a safe, secure and use
    friendly software product to organize documents. If you parents aren’t
    wiling to work with software create a binder to organize their documents,
    medication lists and home inventory

    To manage an older adults estate will legally require a durable power of
    attorney. As durable powers of attorney terminate upon the death of the
    the person granting the power a trust may be more suitable. A trust comes
    with the added benefit of avoiding probate. However, an estate must be of
    sufficient size to justify the cost of a trust .

    2. How can you help them prepare their wills and get their estate in order
    respectfully?

    First let’s understand it is becoming clear that boomers need to help their
    parents to assure that the appropriate planning is accomplished. Some
    people have the attitude that *“* i don’t need to think about these things
    now. I’ve got plenty of time to think about them later. i.e caught up in
    the youthful idea that they are invincible. This is where family needs to
    be proactive. Raising the topic *isn’t* easy. However, whether you are
    ready or not the day likely will come when this issue must be
    considered. and addressed. I suggest opening the conversation by asking the
    older adult a question such as – “Mom or Dad we just went to consult with
    a lawyer about getting our wills. We did this because we realize that no
    one has crystal ball. Boy *is* this stuff complicated. It would help us to
    know how you addressed these issues. What did you do in your will?” This is
    non threatening way to open this topic without appearing nosy and
    minimizes any stress.

    For many people a Will alone is insufficient. I say this because most
    people also typically require a Durable Power pf Attorney and Health Care
    Proxy in which you name another individual to make financial and medical
    decisions for you in the event you are alive but incapacitated. Such
    documents allow the person you have named to make these decisions for you
    without requiring court guardianship. In addition, if you are concerned
    about the costs of probate administration, a revocable trust may be helpful
    in reducing administration costs at your death. A will does not protect
    assets . If that is your goal you need a special type of trust. Only these
    types of trusts can properly protect assets.

    When drafting a will be aware of and understand your family dynamics – plan
    so that disputes are avoided

    3. Do you need to be named Durable Power of Attorney (POA) to access their
    accounts?

    Depends. Accounts can be joint. A POA is not necessary if the account is
    joint. However remember that joint ownership has its own set of risks. The
    account may be the subject of litigation, it may be frozen if a joint
    owner goes bankrupt, divorces, is sued. If the accounts aren’t joint
    then a Durable
    Power of Attorney (POA) is required.The persons appointed as fiduciaries
    need to understand that they are appointed to serve, not to command or
    control beneficiaries, and especially not the principal. This is especially
    true of attorneys-in-fact.

    4. What information do you need to be prepared to take care of your
    parents’ finances? Need to know their social security #, dates of birth,
    pin or passwords. name of bank or financial institution, account number and
    perhaps a Durable Power of Attorney .

    Observations of mine

    In The Tempest Shakespeare wrote “what’s past is prologue.” In other
    words what we do (or don’t do) in our younger years will have a huge
    impact on
    our future. In this regard consider the matter of Terri Schiavo. This is
    the Florida case in which Terri Schiavo’s husband and parents battled
    publicly for seven years over the right to make health care decisions on
    her behalf as she was incapacitated. This battle occurred because Terri
    Schiavo did not have a medical directive. If you become legally incompetent
    without any estate planning documents in place – Will, Trust, Durable Power
    of Attorney, Living Will, Heath Care Proxy and HIPPA Release, your family
    will have to obtain a court order for guardianship or a conservatorship.
    This can be a daunting and expensive process. Easily avoided.

  5. I am an attorney with over 27 years in practice and now serve in a
    senior role at an old line trust company in the Hudson Valley of New
    York. In my practice and in our trust department, I have seen a myriad
    of situations involving parents’ estates. There are certain
    considerations that apply to almost every circumstance.

    Every state has different laws with respect to the execution of wills,
    power of attorney forms and other estate documents. It is ALWAYS best to
    hire a competent attorney to help you and your parents get through the
    exercise of estate planning.

    How should you prepare to take over your elderly parents’ estate?

    Unless your parents are incapable of handling their own affairs, the
    most important thing you can do is talk to your parents about their
    estate in non-legal terms. Find out what they’ve done to date, if
    anything. Gather any papers they’ve put together, whether they cobbled
    together a will forty years ago or met with a Wall Street law firm
    yesterday. You have no legal authority to force your parents, if
    competent, to do anything, but let them know you want to help them make
    the best decisions possible, for THEM.

    How can you help them prepare their wills and get their estate in order
    respectfully?

    Acknowledging that the best advice is to hire an attorney to help your
    parents prepare their will, speak to them about what’s important to
    them. Do not lead them, help them – and make every attempt not to insert
    any armchair lawyering you may want to impart. Aside from the fact that
    the unauthorized practice of law is, duh, unlawful, there are thousands
    upon thousands of cases in the law books of relatives suing relatives
    for undue influence in the preparation of wills.

    Do you need to be named Durable Power of Attorney (POA) to access their
    accounts?

    While a Power of Attorney is usually accepted by most financial
    institutions as a means to access accounts, most states now require a
    specific notation regarding the type of power the agent-attorney may
    wield. For example, the POA document may permit access to bank accounts,
    but not permit real estate transactions. A distinct negative in using
    POAs is the fact that the “power” expires when your parent expires, so
    you can’t show up to the bank after your parent dies and expect to
    access their accounts.

    What information do you need to be prepared to take care of your
    parents’ finances?

    As soon as you can, prepare a file that includes your parents’ state and
    federal tax returns, property tax statements and mortgage statements
    (you don’t want to lose a house because of oversight), insurance
    documents (life, health, property & casualty), bank and brokerage
    account statements (including IRAs and 401Ks), any other government
    agency statements such as social security, Medicare or Medicaid and any
    state program statements. Also, if your parents own a home, see if you
    can locate their original closing papers to determine what they paid for
    the home. It may or may not have an effect on estate taxes.

    Since this can’t, of course, be viewed as exhaustive direction with
    respect to taking over your parents’ affairs, it must be stressed that
    individual circumstances require the oversight of competent professional
    advisors. Contact an attorney or accountant for the best advice.

Comments are closed.