Hey mom, let's talk about money

Dan Kadlec is co-author of The Power Years, a guide for boomers. E-mail him at boom_years@moneymail.com.

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(Money Magazine) -- My dad passed away unexpectedly last year and, as emotionally difficult as it was to go through his things, the family was heartened to find that Dad had quietly done us yet one more huge favor.

He left behind impeccable financial records and a one-page letter telling exactly where to find everything. His letter was so simple and yet so complete - and proved so invaluable - that I've filed it away as both a keepsake and an example.

Yet no matter how much foresight Dad had, he could not see around corners. Estate-tax laws are in constant flux. The trust he had placed the house in was out of date. The bank stocks that made up much of his net worth - and now Mom's - have since tumbled.

My mother never had to deal with such things. She needs advice. In that she has lots of company. According to a study by AARP Public Policy Institute, some 34 million adults are providing care, including financial counsel, to family or friends over age 50.

Thankfully, Mom is open to suggestions from her adult kids. Still, talking to your parents about financial affairs is difficult for any family. Ours is no different.

As we work through the issues, I'm discovering some useful strategies for getting her affairs in order and keeping the peace as my siblings and I take a larger role in Mom's financial life. These may also help with your parent recently left alone:

You know you have the best intentions. Even so, when you question your mom or dad about money, your parent or siblings may see it as a grab for control. A third of boomers who provide care or financial assistance for an aging parent say it has created family stress. Parents and children may even become alienated.

Violet Woodhouse, a financial planner and family-law specialist in Newport Beach, Calif., recalls a case in which the husband passed away and the mom began spending irrationally. The kids were advised that she might be suffering from the early stages of dementia and moved to take control.

She accused them of putting their inheritance ahead of her needs and cut off contact with them. Soon she was unable to pay her bills and, estranged from her kids, wound up with a court-appointed guardian.

Such sad outcomes may spring from little more than an insensitive initial approach, says AARP's Elinor Ginzler, co-author of "Caring for Your Parents: The Complete Family Guide."

"The conversation needs to be, 'Mom, we are not interested in controlling your affairs. We just want to make sure that you are in control,' " Ginzler says.

Tiptoe into the subject. Start by telling a story about someone at your office who's going through a similar experience or show her a magazine article like this one. If you really dread having the conversation, Ginzler suggests, write a thoughtful letter about your concerns.

The first order of business for any child getting involved in a parent's finances is to do what my dad had already done: Make a complete record of financial assets and important documents, including account and policy numbers, as well as the location of the key to the safe-deposit box. You can find a sample checklist in the Solution Center at parentcaresolution.com.

The list should cover monthly bills, bank accounts, the contents of safe-deposit boxes, retirement plans (401(k)s, IRAs, pensions and Social Security), investment accounts, insurance policies, wills and medical directives, plus contact information for any broker, insurance agent, lawyer or other adviser. It's also a good idea to order a credit report to help fill in the gaps.

If any critical document such as a will, medical directive or power of attorney doesn't exist, get your parent to have it prepared. To make management easier, says Atlanta elder-law attorney David Pollan, your parent should grant power of attorney to just one child - or to an odd number so a vote can settle a dispute. But have financial firms mail monthly checking, brokerage and other statements to everyone so that all kids can know what's happening without needing to ask.

Collecting these materials can be time consuming. But having these records will save you hours of agony down the road when preparing your parent's tax return, closing out accounts or just paying the bills. Good records also ensure that you won't overlook hidden assets, as we might have with my dad's long-forgotten stamp collection.

While you're gathering these materials for your parent, compile your own financial info for your survivors too. Keep it simple, short and to the point. It's a guide, not an essay. This is not the place to explain why the dog gets everything. For that you have a will.

My experience is typical of boomers: Dad handled the money, and he was the first to go. That's why we kids are pitching in now and looking for ways to simplify Mom's financial life.

The first thing we did was help her switch accounts to her name. (You need a death certificate; get at least a dozen.) We also set up an online bill-paying system, which will be easier than paper for Mom once she gets the hang of it and far easier for us to help her manage from afar.

Another way to simplify life for a surviving parent: Show her how to set up monthly automatic transfers from a retirement account to a checking account.

Talking as a family with a financial pro can also be helpful. For instance, we arranged for the estate planner that Dad used to come to the house and explain all the financial arrangements he'd made so there would be no mysteries or nasty surprises. Plus, review your parent's investments to see whether any changes are in order and help find a reputable financial adviser if one is needed.

My dad was a lifetime banker; he loved his bank stocks. Heck, we all loved his bank stocks, which are his main financial legacy and which he owned for so long selling them would trigger a massive capital gain. But now we're working through the possibilities for tax-efficient diversification - and we may need help making a compelling case to get Mom to agree to the plan.

As long as your parent is able to manage his or her own affairs, you have zero right to intervene if you meet resistance. Be watchful for signs of trouble, such as a mounting stack of unpaid bills or erratic spending.

Is she suddenly running up the credit cards or giving in to telephone solicitors? That's your cue to step in with a sympathetic "How can I help?" Best-case scenario, she welcomes your offer. If not, be prepared to give examples of the behavior that has you worried.

"Get your siblings on board to help make your case," advises Woodhouse. "But understand that you have no legal rights. If you get nowhere, you have to let it go."

Use the conversation as a learning experience - and write your own letter so you can make sure that your financial wishes are perfectly clear to your kids.

Have you recently been hit up by a family member for a loan? Money wants to hear about it. Email us at makeover@moneymail.com, including who the person was, how much they needed, what they needed it for, and how you handled it. Please send along a recent photo, as well as your location and income.