19 November 2012
As is the case with most difficult situations involving people we love, the planning element of taking over an older relative’s finances is best done in happier times, when both sides are healthy and in a sound state of mind. And like all forms of financial planning, any planning is better than no planning at all.
No one really wants to have these conversations - particularly during happy times - because they project images of a lifestyle or situation that we all hope to avoid. However, the short-term pain of having these conversations well in advance alleviates a great deal of pain, suffering, guessing and arguing if a life-changing event intervenes first.
Once afflicted with an illness, or frustrated with the loss of mobility and freedom, an older relative may be unable to understand questions or express their wishes in proper detail. If there is no plan, family conflict often arises as members argue over responsibilities (or completely avoid them) without knowing what the older relative would really want.
It is critically important to understand is that these conversations should go far beyond the money. In fact, in many cases, while managing the financial affairs is important, it really isn’t about the money at all. These conversations must include discussion about maintaining their independence to the extent it can be, who makes decisions (financial, health, etc.) for them in the event they are unable to, and basic preferences for the way an individual wants to live. With the rising number of single Americans (due to death of a spouse, divorce, or never being married) these conversations will become increasingly complicated as they may ultimately include children, step-children, nieces, nephews, or friends.