At what point should you get involved in your parent’s finances? Unfortunately, this is often thought of too late, and the consequences can be dire. We have all heard stories about elderly people getting scammed by contractors or imposters, or losing their savings through bad “investments”. You don’t want to be intrusive; but you want to make sure your parent or parents are secure and properly managing their finances.
My father was an intelligent, detail-oriented person. When he passed away at 81 years old, we found that he kept a daily journal with details on everything he purchased – be it a pack of gum or an automobile. Fortunately, his financial records were just as detailed and we were able to easily identify all of the assets, change them over to my mother’s name, and manage them for my mother.
Conversely, the situation is quite different for my friend’s mother. Like my father, she was intelligent and financially-savvy. However, ten years after the passing of her husband, assets were still in both their names. Mandatory distributions on IRAs were not taken and penalties were assessed. Life insurance policies and assets were not addressed and became unrecoverable. A “financial expert” had convinced her to put all of her savings into an annuity, leaving her no access to her money for ten years without significant penalty. [Read more…]