Your Investments: When children take care of elderly parents

As life expectancy continues to increase, the burden of both financially and physically caring for aging parents is one of the most important and pressing issues for adult children that exists today.

By AARON KATSMAN
Nurse gives medication to elderly patient [Illustrative] (photo credit: REUTERS)
Nurse gives medication to elderly patient [Illustrative]
(photo credit: REUTERS)
"To care for those who once cared for us is one of the highest honors.” – Tia Walker
Are you taking care of an aging parent? If so, you are not alone. According to Philip Moeller of US News & World Report: “The number of people taking care of an aging parent has soared in the past 15 years. MetLife estimated in 2011 that nearly 10 million adult children over age 50 care for an aging parent. In 1994, only 3 percent of men and 9 percent of women helped provide basic care for a parent.
Fifteen years later, 17 percent of men and 28 percent of women provided such care. “ This issue is becoming a hot topic globally. As life expectancy continues to increase, the burden of both financially and physically caring for aging parents is one of the most important and pressing issues for adult children that exists today. Throw into the mix that children may be spread out all over the world, and it’s a recipe for disaster.
I often see families torn apart by this responsibility. It’s sometimes difficult for families to retain harmony and still provide the necessary care needed for their parents. Managing family finances is often carried out between spouses. But what happens when children have to start taking control of their parents’ situation? There are many different approaches families take in handling this issue. Some elderly parents single out one child to handle their financial affairs. In most cases, the siblings who are not singled out are happy to be free of the responsibility. The most common approach is where parents don’t want to single out any one child for fear of insulting other children, so they ask all their children to cooperate in overseeing their financial matters.
Which method is best?
There is no “best” method for success. The goal should be to limit the amount of family discord while providing the greatest quality of financial oversight. Each family needs to understand its own dynamic and take geographic relationships and fiscal experience into account.
The most common case I see is where there is one child living in Israel, and the rest of the siblings still live abroad. (While I have focused on the Israel example, this could just have easily been one child in New York, the rest in California and the parents in Florida or in some other country.) The parents sell their house and come to live in Israel. The siblings come to consult on a financial plan for their parents.
We discuss the assets, the basic income requirements and health-related expenses. The sibling living here accepts the burden of physically caring for their parents, and all of the siblings plan on jointly handling the money. Then they all return to their various homes. That’s when the trouble begins.
Since the rest of the siblings are far away, they begin to lose touch with the day-to-day issues involved in caring for their parents. Nonetheless, they feel confident in their ability to handle money, so they all have strong opinions about the financial decision-making process. The child actually caring for the parents, on the other hand, though no money expert, is the one who has to pay all their parents’ bills. There is often an incredible disconnect between them in terms of financial priorities.
They all seem to have their own agenda.
Furthermore, each sibling doesn’t want to burden the other, so they call the adviser(s) with minor details. The lack of clear communication between the siblings themselves and with their parents makes for a tricky situation.
The need for objectivity
Siblings need to open up the lines of communication among themselves, and they should definitely consult with an adviser if they need help in creating a financial plan. Often it takes an objective third party to smooth out emotional flash points and maintain family harmony.
A financial adviser can develop a plan for an elderly parent in consultation with the responsible sibling and then can invite the rest of the siblings in to hear the proposal. Everyone can learn the details, ask questions and understand the greater picture, without one sibling appearing too domineering or pushy.
Assuming control of your parents’ financial responsibilities can be emotionally draining and time consuming. However, having a concrete plan for what needs to be done, and who should do it, can help mitigate some of the emotional energy.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc., or its affiliates.
aaron@lighthousecapital.co.il
Aaron Katsman is a licensed financial professional in Israel and the United States who helps people with US investment accounts. He is the author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing.