Take steps now to enable your kids to help manage your money if you become too frail.
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As you age, chances are good that you don’t intend to make any decisions that will frustrate or anger your adult kids, put them at odds with their spouse or partner, or even cause a permanent rift among extended family.
But mix neglect with procrastination, and you’ve got a perfect recipe for a financial or logistical mess that your adult children or other family members will have to deal with. And if it’s a serious-enough issue without an agreed-upon solution, it could negatively affect their relationships for the long term.
One common way that you can unintentionally create problems for your adult children or key family members is to create a financial mess that your family has to clean up. Let’s look at how to prevent such a mess.
As they age, many people remain financially sharp—but not everybody. One in five people between the ages of 75 and 79 have mild cognitive impairment or dementia. This risk increases to one in two for people who are in their 80s.
According to recent research, even mild cognitive impairment makes it hard for people to manage their money on their own. If you develop a diminished capacity for making financial decisions, you could incur substantial monetary losses due to making mistakes, exploitation, or fraud.
Often the first sign of cognitive problems is experiencing significant financial losses—after it’s too late. Then adult children often need to step in to help clean things up. At that point, it’s common to find loads of unpaid bills, expired insurance policies, late penalties, and no clear roadmap to the family member’s bank accounts, investment accounts, or insurance policies.
Cleaning up this mess inevitably takes time—time they could be spending with their families. It can also be a distraction from their jobs and prompt arguments among your adult children or other family members about the best ways to handle your money.
It’s simply smart to have a plan in place for whatever changes may lie ahead for you. The Thinking Ahead Roadmap provides a free, easy-to-follow, six-step plan to help you protect your money from scams, exploitation, and costly financial mistakes.
Start by choosing someone you trust to be your financial advocate. This is often an adult child or other family member, although not everybody has adult children who can or would be willing to help.
The next step is to make a complete inventory of all your finances, so that your advocate doesn’t need to spend days trying to learn where your money is and all the bills that need to be paid. The remaining steps help you complete your plan, including recognizing the signs that let you know when it might be time for your advocate to help you.
As we age, many of us have likely seen our parents decline in their later years, parents who needed a substantial amount of our time to help with one or both of these situations. Let the memory of that experience or this article be a big wake-up call for you. Don’t neglect these situations—instead, plan ahead to help keep your family relationships strong.
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