When is it Time to Take Over Parent’s Finances?

When is it Time to Take Over Parent’s Finances?

Losing the independence that comes with being able to drive, is often followed by the realization that parents can no longer be entrusted with their own finances. This is a difficult issue, because the parents of Baby Boomer kids are the “Greatest Generation.” As a general rule, they were and are extremely private about finances. The steps to take are outlined in this article, “Here’s how to know when it’s time to take control of your parent’s finances,” from Considerable.

The tricky part is figuring out the timing. If it is done too early, you’ll be battling with your parents. Conversely, if it is done too late,  major financial damage may be done.

Keep your eyes open for signs that your parents are not able to maintain their responsibilities. That includes changes in their behavior, misplacing things and not being able to locate them, or making too many trips to the bank for reasons that they can’t or won’t explain. Another clue: purchasing things they never bought before. You may notice paperwork piling up on a desk that used to be tidy and organized.

One woman didn’t realize that her mother was being scammed, until she had sent more than $100,000 to scammers. Elderly financial abuse is pervasive, and the Senate Special Committee on Aging estimates that elderly Americans lose some $3 billion annually to financial scammers.

One elderly woman suffering from dementia, forgot to pay her long-term care insurance premiums and lost the coverage. The company had sent five notices, but she was not able to manage her finances.

Even those who have close relationships with their parents and their daily events can have slip ups. Often, the children don’t step in, until the parent has a health crisis, and then it becomes clear that things have not been right for a while. If one parent is overwhelmed by taking care of their spouse, an otherwise organized person may become prone to making mistakes.

The earlier children can become involved, the better. Children should ideally become involved with their parents, while they are still healthy and able to communicate the necessary information about their financial lives. If the family waits until illness strikes or dementia becomes apparent, there may be significant and irreversible damage done to the parent’s finances, like the woman who lost her long-term health care coverage. There are some instances where the court need to become involved, if the parents are not able or willing to let the children help.

An elder law attorney will be able to help the family as they transition the parents away from being in charge of their own finances. It’s not always an easy process but becomes necessary.

Reference: Considerable (April 18, 2019) “Here’s how to know when it’s time to take control of your parent’s finances”

Who Will Control the Funeral Arrangements When I Die?

nj.com’s recent article, “Why does a funeral home need my signature?” explains that what happens with funeral planning, depends on the deceased’s will and state law.

This issue may become important, depending on whether the deceased designated a funeral agent in his or her will. The funeral agent is the legal way to designate a specific person to arrange your funeral.

To appoint a valid funeral agent, it has to be done in a will or codicil. Any appointments made elsewhere aren’t acceptable. If you want to appoint a funeral agent, visit an experienced estate planning attorney.

Note that the rights of the funeral agent take precedence over the rights of all others. This includes the deceased’s spouse and other relatives, like children and parents. After the death and before the will is probated, the executor will tell the funeral agent that he or she is in charge of the funeral, as well as the amount of money that’s available to spend on arrangements.

Experts advise that you should consider naming a funeral agent in your will, if you don’t have any surviving relatives or close family. When a funeral agent is designated, there will be no issues regarding who is in charge of making your final arrangements. If there’s conflict with family members of equal legal right, such as children, make one of the children your funeral agent and make your wishes known to that individual. If you believe you can’t count on family to follow your wishes, find a trusted friend or companion to serve as your funeral agent.

The hierarchy set in the New Jersey statute is in the following order:

  1. The funeral agent designated in the will;
  2. The spouse or civil union partner of the deceased;
  3. The majority of surviving children over the age of 18;
  4. The deceased’s parents;
  5. The majority of surviving siblings over the age of 18; and
  6. Other relatives, according to the degree of their relationship to the deceased person.

A beneficiary can control the funeral arrangements, only if he or she is also included in the hierarchy detailed in the statute.

Reference: nj.com (April 22, 2019) “Why does a funeral home need my signature?”

Retirement and the SECURE Act

The numbers for most Americans entering retirement are not encouraging, with one in three retirees having no money left at the end of the month and needing to dip into savings to pay monthly bills, according to Next Avenue’s article “Will the SECURE Act Really Bring Retirement Security to Older Americans?” With record numbers of retirees declaring personal bankruptcy, little or no pensions and out-of-pocket medical expenses that have become unmanageable, retirement has lost much of its golden glow.

For the 75 million boomers and the Generation Xers who follow, the retirement income crisis has gotten Congress to act together, an unusual occurrence in these divisive times. Both the House and Senate have introduced bills that would provide American workers with expanded opportunities to participate in employer-sponsored plans.

The House Ways and Means Committee has unanimously passed a bipartisan bill, The SECURE Act: “Setting Every Community Up for Retirement Enhancement.” This bill incorporates provisions from the Senate bill RESA (Retirement Enhancement and Savings Act of 2019). Together, RESA and SECURE are the most sweeping retirement legislation, since the Pension Protection Act was passed in 2006.

The SECURE act is a complex bill. For our purposes, we’ll focus on four key components.

  • Under SECURE, retirees would be permitted to take required minimum distributions from traditional IRAs and 401(k)s at age 72, instead of 70½. In addition, workers would be permitted to continue to contribute to these savings accounts past age 70. Americans are working and living longer and should not be forced into taking retirement money from accounts before they need it.
  • The top limit for automatic escalations of 401(k) contributions would be 14% of pay, up from 10%, so more can be set aside.
  • Small businesses would be given the ability to band together to create multi-employer 401(k) plans and receive tax credits, if they set up automatic enrollment plans.
  • Part time workers would be eligible for retirement benefits, provided they have worked at least 1,000 hours in one year or at least 500 hours for three consecutive years.

How much financial security will SECURE actually provide? It depends on who you are. If you are in good health, with a stable work and a financial cushion, it may help you. However, if you are living paycheck to paycheck, there’s not much here to crow about.

Lower income Americans, especially those with physically taxing jobs, tend to have shorter work lives, exiting the labor market in their 60s or younger, because of health problems. Giving them more time to invest and draw benefits may not have much of an impact on their retirement finances.

The ability to contribute 5% more to a 401(k) or participate in a plan set up by a small business may be appealing, but it only works for those who have the money to participate in the first place.

The most promising aspect of the SECURE act is the opportunity to be enrolled in a plan for part-time and temporary workers. More Americans now work part time. Many of them are women caring for children or parents or retirees who returned to work, because they needed the cash flow.

Another positive aspect is the small business that benefits from setting up a plan that automatically enrolls employees in a plan. If contributions are set to a default of 3%, with the ability to opt out or increase the amount, that may get people who would otherwise not save at all the ability to set something aside for their retirement.

Reference: Next Avenue (April 25, 2019) “Will the SECURE Act Really Bring Retirement Security to Older Americans?”