I recently set out to learn how parents would want their adult children to handle their finances if they could no longer act for themselves. I spoke with six people, ranging in age from late 50s to mid-80s, who currently do not need assistance. Should their situation change, it is their children who will most likely act as their fiduciaries. Here is what they had to say.
“The most important thing my kids can do is help me stay in my house,” said Joan. “I don’t believe in parents moving to where their children live. I am involved in my community and I want to stay in my community.”
Money allows older adults to feel secure, make choices, live where they want, and pursue activities they enjoy. Although how people spend their time and funds varies, all agreed spending quality time with family is a top priority. “What makes me happiest is being with the people I love,” said Susan.
“I don’t like money for the sake of money,” Susan said. “I like it for what it allows me to do.” Dan and Kay concur. “We stressed to our children our priority is quality of life, not quantity of money,” said Dan. Dan and Kay continue to live by these values. They, like the others I interviewed, earned their money. They travel and enjoy life, and they choose to live below their means, save, and invest.
Determining how to spend their money is important. This is especially true with gifts and loans to family and donations to non-profit organizations. The parents I interviewed make these decisions according to their beliefs, their available funds, and the recipients’ current need. If they become incompetent and can no longer make these choices themselves, many want gifts and donations to cease. “If a person has the money but can’t make the decisions, no one should be distributing their money,” said Bernadette.
Other people may want to continue to make gifts, but their care needs may not allow it. They may not be able to sustain past giving levels. “When parents are disabled, the need for their resources increases,” said Emily Morrow, a former Burlington trust and estate attorney.
Parents expect the person managing their funds to help them remain as independent as possible. “I don’t want my kids to put pressure on me to do anything I don’t want to do,” said Joan. They also expect their financial representatives to pay their bills and provide them with quality care. “After parents lose capacity, providing for their care is top priority,” Morrow said.
How can adult children balance their parents’ wishes with their care needs? Parents can greatly help their children by using revocable living trusts, advance directives and powers of attorney to give instructions on how their money, personal affairs, and care are to be managed.
“Handling parents’ money requires trust: trust between the parents and their children and trust among the children,” said Morrow. “It also requires maturity to keep emotional reactivity out of decisions that need to be made for the benefit of the parent. All of this presupposes that the children are honest, reliable, capable, and well intentioned, and, of course, if given any control, will not abscond with the funds,” she said. The people I interviewed are fortunate. All have one or more children they trust, and who have the skills to manage their finances.
Knowing your parents plans and expectations for managing their affairs is important. My interviews underscored a common theme: parents want their adult children to know, understand and act according to their values. If you don’t know your parents’ desires, consider a family meeting to discuss the options. Should you and your siblings need to step in, you can act with confidence, knowing you are managing your parents’ affairs according to their wishes.
The names of individuals quoted in this article have been changed to protect their privacy with the exception of Attorney Emily Morrow.