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. 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 parent’s 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. Other elderly parents don’t explicitly mention anything and adopt a “wait and see” attitude. Here, an alert child should step in before any irreversible fiscal damage is done. 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 one coast and the rest of the siblings still live back home. The parents sell their house and move to the coast. The siblings come to consult on a financial plan for the parents. We discuss the assets, the basic income requirements, and the sometimes-inordinate health-related expenses. The sibling living near the parent accepts the burden of physically caring for the parent, and all of the siblings plan on jointly handling the money. Then, they all return to their respective 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 parent. Nonetheless, they feel confident in their ability to handle money, so they all have strong opinions in the financial decision-making process. The child actually caring for the parent, on the other hand, though no money expert, is the one who has to pay all the parent’s 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 advisor(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 between them, and should definitely consult with an advisor if they need help in creating a financial plan. Often it takes an objective third party to smooth out emotional flashpoints, and maintain family harmony. A financial advisor 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 parent’s financial responsibilities can be emotionally draining and time consuming. However, having a concrete plan as to what needs to be done, and who should do it, can help mitigate some of the emotional energy. Siblings should be prepared to consult with one another, and assign specific duties to all the family members according to their individual abilities.

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