Friday, April 23, 2010

Kiplinger provides updated list on what adult children should know about their parents' finance; also, prevention of POA abuse (with third parties?)

Cameron Huddleston, a contributing editor at Kiplinger, has a new list (April 23, 2010) of items that adult children should know about their parents’ finances, while their parents are still able to manage their own affairs. The link is here .

The tips are pretty basic, but less financially savvy parents (especially when widowed) might not have kept good track of individual stocks and bonds. It’s a good idea to consider having them consolidated into investment or brokerage accounts that all major banks offer. It’s particularly important to know whether they have already set up a living will, and/or a living trust, and have already conferred a power of attorney to anyone.

The new article links to an important piece by Kathryn A. Watson, “Prevent Power of Attorney Abuse”, dated Aug. 1, 2009, link here.   The topic came into public attention after the NYC trial of Anthony Marshall for fraudulent handling of the affairs of his mother Brooke Astor when she died at 105.

A couple of pointers stand out here. The article places much more emphasis on third-party supervision than is often expected, and urges the parent to pay close attention to a potential POA-holder’s own financial problems, especially debt. The relative with the POA should be behaving well by “Suze Orman’s” standards. (Maybe the parent ought to know the person’s FICO score.)  In most states, comingling or POA abuse can be considered a form of criminal elder abuse.  It's possible that in the future some states will consider requiring third-party accountability.

A potentially troublesome conumdrum can occur. The adult child should be able to prove that he or she can live on his or her own separate resources (without the expectation from a will or from comingling), but the demands of eldercare can make this (such as continuing to remain well employed in an already difficult economy) itself challenging, and it can affect fundamental decisions the adult child must make about his or her own life. As people live longer, the adult child may well himself or herself have "retired" presenting double generations in retirement.

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