Protecting Elderly Parents' Assets
How to Handle Common Financial Planning Roadblocks
Financial planning can be tricky. The process is unique for each person due to myriad factors including income, expenses and much, much more. My mother was married to Lee, a man who didn't believe in doing a great deal of future planning. Oh, he saved money and invested, but the idea of ever needing something like long-term care insurance was totally outside of his view of the real world. His favorite response to almost anything that would cost money was, "What do we need that for?" That was the first obstacle I had to overcome in order to protect Mom's financial future and begin taking steps to become involved in her financial planning process.
When One Spouse Won't Take Steps to Protect the Other's Future
Long before Mom was diagnosed with mild cognitive impairment, and subsequently with Alzheimer's disease, her husband, Lee, had been diagnosed with COPD in the form of chronic emphysema. However, in his mind his current and future care wasn't going to be a financial problem. In fact, he often said that he didn't expect to live long enough to be concerned about running out of money. What's sad about that type of thinking is that it still prevails in many families today who avoid thinking about financial planning for their elderly loved ones. And the reality is that people, even chronically ill people, don't always die when or how they expected—and money is always an issue. Dying is not financial strategy.
Overcoming Roadblocks to Financial Planning
Financial planning that involves your parents—and most elderly people for that matter—can be difficult. One big problem with some older spouses or parents is that they are often very reluctant to share their financial information or the terms of their wills and trusts with family members, even with their spouses. That, too, seems to be a throwback to ideas that the adult children and wives in particular have no business knowing those "secret" financial details prior to the death of a parent or spouse. Today, that thinking is a recipe for disaster.
My second challenge was actually finding out about Mom's personal financial situation. She had never told me whether she had any money of her own, and I had no idea how dependent she might become on others if her husband didn't have her future financially secured. To be honest, I didn't ask for Mom's permission to dig into her investment information. One day when she was busy doing things around her house I went to her desk, and knowing where she kept her monthly financial statements, I simply pulled the most recent copies and read them. The good news was that I learned that Mom had actually done some financial planning of her own: she had some savings, but potentially not enough, depending on how long she lived. So Lee's will took on added importance. As Lee had so often said, he was responsible for the financial planning, and that caring for Mom's financial security was taken care of. Mom wanted to make sure that was true. She felt entitled to be cared for, especially since she had not only shared his life for almost twenty-five years, but was now his primary caregiver. I fully supported her position on that issue. But only Lee knew how much money he had, and he had not been forthcoming with any information as to what his will stipulated for its disbursement or future care for Mom after his death.
Getting Mom "Scared Straight" About Financial Planning
The next problem I faced was the fact that without knowing the terms of Lee's will, there was no way we could know what kind of financial challenges we might be facing once Mom was on her own. Lee had always told everyone that he would provide enough money to care for all of Mom's needs, but with neither Mom nor me privy to the contents of his will, we couldn’t be certain if that was true. Mom told me that she could get a copy of Lee's will, but she was ambivalent about doing so and especially uncertain about having me review it. To her it was a violation of the bond of trust between Lee and her. His pledge of providing for her through his own brand of financial planning was sufficient in her mind, even though she wasn't privy to the details.
I spent many hours over the next few weeks convincing Mom that if we didn't know what Lee's will said, it was possible that there wouldn't be enough money for her to stay in her home or cover her expenses if she lived another ten or fifteen years. And once again I played the guilt card that it would be a tremendous burden on us, Mom's children, if—due to faulty financial planning—we had to step up and help her in her later years. At that time, virtually everything I said to Mom about we kids being burdened if she needed money from us was untrue; it was done to raise her level of anxiety regarding the financial terms of Lee's will, to make her understand the importance of financial planning, and to help her recognize the potentially significant impact it could have on us. My plan worked and she finally agreed to ask him for a copy of his will. She also agreed that she'd allow me to read it. I felt I'd be much better able to reassure Mom about the contents of Lee's will, and hopefully reassure her about a future of financial security, after reviewing it myself.
Getting the Financial Facts
I'm not sure what Mom said or did to convince Lee (whose birth sign is the "stubborn mule") to change his mind. All I know is that she was able to get a copy of his will, and I'm very glad she did. Mom gave Lee's will to me to review, and it was shocking. Lee's personal style of financial planning aside, the arrangements he'd made for Mom were minimal. He had put his investments into a trust, which stipulated that Mom would receive a maximum of $5,000 per year until she had depleted all her personal assets before receiving any more money from his estate. His financial planning also made it very difficult to invade the trust except under some drastic circumstances.
Although Mom didn't fully understand all the terminology of the will and trust, I made it clear to her that the will in its present form was not going to be sufficient to take care of her—especially at a rate of $416 per week for all of her expenses. Mom was furious with Lee, who told her that he had set his trust up that way because Mom "wasn't good with money" and he "didn't want her to spend it foolishly." Now I was furious, too, about his chauvinistic attitude and dismissal of my own increasing role in my Mom's life. It was clear that I would need to play an active role in advocating for her personal financial planning needs.
After reviewing Lee's will, I walked Mom through the changes that I felt Lee would have to make to his will in order to be acceptable, which I defined as making funds readily available to Mom with no restrictions. Because of her limited understanding of financial planning, business and legal terminology, and her increasing memory loss, I wrote out my suggestions for Mom and told her that she would have to discuss each of those suggested points with Lee. Apparently that approach worked: Lee very reluctantly agreed to rewrite the terms of his will and trust.
In the ensuing weeks, Mom made sure that Lee kept his promise, and I was permitted to review the new documents to be sure that they were rewritten in a way that was not punitive or restrictive regarding her access to funds as they were needed. And while it made Mom and me feel better, the reality of the entire event was that Lee, who had stubbornly insisted that his financial planning was sound, and denied any possibility that he’d spend down virtually all of his money, actually outlived almost all his money. When he finally died, after spending two years as a homebound hospice patient, he left an amount of money that was less than what was necessary to cover Mom's basic expenses during the subsequent two years. So much for Lee's guaranteeing Mom's future financial security.
Communicate Early for Solid Financial Plans
When it comes to being certain that a surviving spouse is going to be financially secure, clear communications between spouses and family members is crucial. So too is listening, especially to the spouse who tends to be the financial decision-maker—usually the husband in today's elderly couples. Lee had always assured Mom that, thanks to his financial planning, she'd be well taken care of after his death. But neither Mom nor I had seen the proof of those words. So, as Ronald Reagan said when it came to the disarmament of the nuclear missiles of the former Soviet Union: "Trust, but verify."
It is extremely important to keep these words in mind when making certain that a surviving spouse has sufficient funds and access to those funds, and ensuring that the terms are spelled out in legal documents such as wills, trusts and estate plans. These financial planning tools are as essential as having open communication between family members. This can be even more critical in second marriages, and adult children may have to step in to protect their parent, as I did for my mom. Since no one knows for certain which spouse or parent will be the first to die, be sure everyone's ducks are lined up in a solid financial row. Because when it comes to financial planning and protecting your parent's financial security, it's best to assume nothing and verify everything.
Until next time, thanks for caring.
Ron Kauffman is a Certified Senior Advisor, and an expert on issues of aging and caregiving. He is the author of Caring for a Loved One with Alzheimer's Disease, available at www.seniorlifestyles.net.
Editor's Note: For further reading on financial planning for your elderly parent, see What Is…Guardianship or Conservatorship?