In a previous blog, I wrote about some of the challenges in providing financial planning for Millennials. In this article, I would like to address some of the challenges of providing financial planning assistance as you care for elder relatives.
The job of caring for elder relatives can often include helping them with their finances in some fashion: from checking that the utility bills get paid or the tax returns get filed, to relieving them of financial management responsibilities completely. For many caregivers, it is in dealing with these matters that you may get the most resistance and pushback. Being able to look after their own finances is an important aspect of independence and self-worth for most seniors. They have been the ones caring for you and dispensing advice for decades. When the tables turn, they may hold on to that checkbook like it’s a life preserver.
To help avoid hurt feelings and the inevitable arguments that may come from this, here are some helpful tips for those who are in a caregiver’s role:
1) Start the conversation sooner rather than later – and do it gently
In some families, money is a taboo subject but it doesn’t have to be. Getting someone to be forthright with you about their financial situation can be very difficult. If you are in a position of being a caregiver, there are some basic questions you will need answered:
a. What are their sources of income?
b. How are their assets titled? (Individual ownership or jointly owned?)
c. Have they done any planning to pay for long term costs?
As you begin to take a larger role in their finances it is important to make the transition slowly. Give them autonomy where they can handle it. This will reduce tensions between you and them.
2) Get organized
Create a list of the important information that you, as a caregiver, would need to know in case of an emergency. The list might be a simple description of where to find important documents or it may be as complete as a filing cabinet with files containing bank account statements to tax returns. Your elder relative may also want to keep this information guarded (as they should). Be respectful when asking them and dealing with their financial circumstances, especially if they are not very organized with their information. Small adjustments to what they have been doing will be received far better than large, wholesale changes to their way of dealing with their finances.
3) Simplify their financial life
Many seniors have their financial assets spread among a range of financial institutions. This would be a good opportunity to begin consolidating those assets into one or two firms.
4) Do an annual review
At the end of the year, help your elder relative make a list of all investments and sources of income they receive. This will accomplish two things. First, it will be a good organizational exercise to prepare for the upcoming tax season and, secondly, it will provide you with a master list to go back and review in future years. It will also help you keep track of future deadlines such as tax instalment dates.
5) Have Power of Attorney documents drafted
Designating a Power of Attorney not only helps your elder relative plan ahead for a time when they might need help managing their financial affairs, but also their health. There are two types of powers of attorney: Enduring power of attorney, which gives a designated person the authority to make financial decisions on behalf of the person; and Personal Directive, which grants authority to make healthcare and non-financial decisions on behalf of the person.
Caregivers should have these documents prepared long before their elder relative starts having troubles handling certain aspects of life, and they must be capable of deciding to seek assistance.
If these documents are not in place and the elder relative loses the ability to make their own decisions, the caregiver may not have the authority to provide the necessary assistance, whether it is financial or health care related. Each province has its own laws regarding powers of attorney. You may wish to consult a lawyer in the province that the power of attorney is held to address any questions you may have and to have the documents drafted.
6) Seek advice from a financial planner who has experience in elder care planning
The financial planner should be able to look at your elder relative’s big picture and offer insights and recommendations on managing cash flow, restructuring assets, tax saving opportunities, and estate planning suggestions. But beware of misleading titles. Because of the amount of wealth concentrated in today’s seniors, they have become targets of unscrupulous planners and advisors looking to pad their own bottom lines. In short: do your homework. Both the Financial Planning Standards Council and the Institute of Advanced Financial Planners (IAFP) – or Institut québécois de planification financière (IQPF) in Quebec – maintain databases that allow you to search for a planner to help meet your needs.
If your elder relative refuses your efforts to help them manage their finances, you may want to ask to sit down once a month or so just to review their bills and other payments. This allows you to become familiar with the routine in case you need to do it one day. Many utility companies will allow you to be listed as an emergency contact if payments are missed. Financial institutions will allow a relative to receive duplicate statements on accounts. Having a handle on their affairs today will make things a lot easier for you, and other family members, when your elders can no longer look after their affairs on their own.
Darin Yuzyk has over 20 years of experience in financial services and education. He customizes and delivers employee-focused education programs for a variety of corporate clients. Through compelling and dynamic group seminars and one-on-one presentations, Darin helps employees understand and personalize their pensions and financial plans.