Estate Planning - Helping With Your Parent's Finances

You may find a point in time when your parent needs assistance with their finances. Taking over financial responsibility for a parent can be a touchy topic, but if done properly, can often provide a great sense of relief.

If you have been appointed as your parent’s financial power of attorney and the time has come to begin assisting them, here are a few pointers to ease the transition:
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• ​​​​Begin the conversation early. Do not wait until your parent begins to show signs of senility or other serious health complications to talk about how they would like their business affairs handled. Ask your loved one to prepare a list of their assets. This list should include other information such as locations of assets, helpful business professionals, passwords, etc. If your parent is willing, you might begin by working together to pay bills, review bank accounts, balance checkbooks and prepare taxes.
• Understand your role. As a financial power of attorney, you owe a special duty to care for your loved one’s assets called a “fiduciary duty”. This means that you have a legal obligation to act in their best interest and to do everything in your power to preserve the assets under your control. An intentional failure to do so can have you facing legal consequences.
• Be respectful to your loved one. Accepting help from someone, even a child or other trusted individual, is difficult for many people. Once you assume full responsibility for their finances, make an extra effort to maintain an open line of communication with your loved one to reassure them of their financial status.
• Keep good records. As a financial agent for someone else, your record keeping needs to be clear and concise so you can provide quick and accurate answers regarding the current state of your loved one’s finances. If you are not an organized person, you may want to reconsider accepting the role as financial power of attorney. Banks with a trust department are usually willing to act as financial power of attorney for a fee if a family member is not able or willing to serve in that capacity.

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• Do not co-mingle funds. Your name should be added as a signatory on all your loved one’s financial accounts. However, your name should NOT be added as a co-owner. You will need to provide a copy of your parent’s financial power of attorney to all the institutions with whom you conduct business, showing your authority to act as his/her power of attorney.
• Identify assets. If your parent has not already provided you with a list of his/her assets and their location, this may require interviewing them, reviewing tax records, sifting through old mail, rummaging through file cabinets, visiting banks and investment advisors, etc. It is important to create a comprehensive list of assets, income, and expenses so you can effectively manage your loved one’s financial affairs.
• Use other professionals. Acting as a financial power of attorney is not an inherent skill. If you have questions that require an accountant or attorney’s assistance, do not be afraid to ask a professional to help you do your job. Paying a fee for professional consultation or assistance is far wiser than making costly mistakes due to your lack of knowledge and expertise.

​If you have questions about powers of attorney, contact Davis & McCann, P.A., Dodge City, Kansas at 620-225-1674. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on Estate Planning, Medicaid and Long-term Care Planning, Special Needs Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate, 1031 Exchanges, and related matters.