Congratulations. You have been chosen by your siblings as the most financial responsible and trustworthy member of the family.
Your prize? You get to handle your elderly parent’s finances and bills!!!
What’s your next step? Transparency.
You need to figure how your actions will be transparent to the rest of the family. This way, everyone will have access to equal information about your parents’ finances, and how the money is being spent.
Why is that important? Because people get sued all the time, by their own family members, for taking on this type of responsibility. Much of this litigation could have been prevented and thwarted with some good old fashion communication, accountings, and most important- transparency.
Here are some good ideas for you to consider when looking for ways to be transparent when handling elderly parents/parent’s money:
- Work with your accountant or other professional to find the right software or app that allows you to scan receipts, and keeps track of expenses and cash flow. This way everyone has equal access to this information on demand, and can see this information for their own eyes;
- Hire a third party book keeper to keep a record and track of the expenses and outlays;
- If the bank won’t send out multiple account statements, then make sure that you send the account statements to your siblings so that they can see how things are progressing;
- If there are significant expenses on the horizon, consider discussing them with pertinent family members as a heads-up;
- Create a mechanism for resolving disputes before they arise, such as directing all disputes to a pre-selected mediator; and
- Copy pertinent family members on significant emails that involve financial matters.
The bottom line is that the currency of the realm when it comes to handling the finances of an elderly family member is transparency and disclosure.
Family members often have no idea how much basic cost-of-living expenses can add-up to for elderly family members. This is addition to costly elder-care expenses. For example, let’s say that your brother… who turned over all of your elderly parent’s financial management responsibilities to you… was looking forward to receiving a $2,000,000 inheritance from your parents. You never practiced transparency with him, and quite frankly he never really asked too many questions. So, naturally, he is not prepared for what’s coming next….
And, what’s coming next is that cost-of-living and elder-care costs have greatly reduced your parent’s net worth. But, he does not know that, since you were never transparent with him. So, when the time comes for him to receive the “$2,000,000 inheritance” that he has been anticipating, let’s just say it will be a shock for him to see a check for $975,000.
With his $975,000 check still hot in his hands, he will immediately call you (after first calling his lawyer) and demand immediate answers for the the “missing” $1,025,000 sum from his inheritance!!! And trust me, he is going to want to see some hard proof from you that this money went to pay for your parent’s necessary expenditures. He is not going to want to take your word that every penny was for your parents, and the accusations will soon start flying.
The problem may be, however, is that you were a sloppy records and receipts keeper. After all, you never expected to be accused of wrongdoing. At that point, with tensions high, you may not want to put the work into resurrecting years of records and receipts just to assuage your brother’s wild accusations. Furthermore, you may be very hostile to him for even questioning your integrity.
You can see the writing on the wall…
This scenario could quickly turn into an ugly power struggle between brothers, involving real dollars and serious emotional family issues. These types of disputes often rapidly find their way into lawyer’s offices, with unforgivable and unforgettable family damage resulting therefrom.
Therefore, do yourself a favor, prevent this scenario from occurring. As the old adage goes– “An ounce of prevention is worth a pound of cure.”
Even if it is a pain, be as transparent as you can be when managing an elderly parent’s money, because at the end of the day remember – Inheritance is poison.