As your parents age, you may become increasingly involved with managing their money. One delicate aspect of this role is helping them make financial gifts to family members and other individuals. Many families have complicated dynamics around money. How do you navigate this possible quagmire?
Marcy helps her mother, Lila, manage her finances and will serve as Lila’s power of attorney should the need arise. Lila’s fifty-year-old son, Chad, frequently asks for money. Lila gives it to him. Marcy believes Chad is irresponsible and wants her mother to insist he live on the money he earns. Marcy understands Lila’s finances and is worried her mother’s gifts are draining her assets at the expense of her financial security.
Is Marcy bound to watch her mother give her money away? Yes. When an individual is competent, other people cannot decide how that person spends his or her money regardless of their role or relationship.
Adult children can raise their concerns with their parents, however. In doing so, it is helpful to focus on the motivation behind the gifts. Many parents worry about their adult children. Giving money is one way aging parents believe they can help.
It is also helpful to learn your parent’s past giving patterns to family members and individuals. If current gifts are in line with those made in the past, the best thing may be to respect your parent’s decisions. But, if an individual is suddenly receiving much more money than normal, it is time to investigate. When elders are uncertain about whether and how much to give, they can be easily influenced by the recipient of the gift.
Some adult children mistake their parents for banks, ignoring their parents’ circumstances. This is the case with Linda whose daughter, in her forties, asks for loans several times a year to help her through her a current crisis. Although the requests are accompanied by promises to repay, payments rarely come. Linda’s generosity was making it difficult to pay her bills. Linda agreed to have her financial advisor analyze her assets. The advisor determined Linda can make “loans” as long as she is willing to cut back on her own expenses. Linda did. She feels her daughter has greater need for her money.
Having a neutral discussion with your parent about giving to other family members can be difficult. An impartial third party, such as an accountant or financial advisor, can analyze your parent’s assets, income and expenses, and make unbiased recommendations.
If you suspect your parent is being financially abused, or is making choices that puts himself in danger, it is necessary to intervene. Confidential calls can be made to Adult Protective Service (APS) agencies which investigate reports of elder financial abuse, neglect and exploitation. To locate an APS agency near your elder, visit the National Adult Protective Services Association website at napsa-now.org/get-help.
When there is no abuse involved and your parent makes choices with which you disagree, your option is to respect your parent’s decisions.
The situation is different when your parent has lost mental capacity, requiring another person to manage his or her money. If Marcy’s mother Lila has dementia and Marcy is serving as her power of attorney, what does Marcy do when her brother asks for money?
Marcy, as her mother’s fiduciary, needs to set her own feelings and opinions aside and act in her mother’s best interest. Clearly, it is Lila’s desire to help support her son. If her mother won’t be negatively impacted by these gifts, Marcy would be continuing her mother’s wishes. But, if Lila needs her money to pay for her care, Marcy’s first responsibility is to pay for it. Although this may cause strife in the family, elder care is expensive and gifts may need to stop.
Helping your parents manage gifts to family members can be tricky. Adult children in this role need to understand their parent’s finances and giving patterns. They need to lay their own biases aside while balancing their parents’ wishes and legal rights with protecting their interests.