Many of you may have, or might one day, awaken to a startling revelation: one of your parents is not exhibiting the responsible fiscal oversight of his or her finances. For as long as you have known your parent, there was scarcely a check you could inquire about that they did not only know why it was written, but could produce the hard copy receipt in nanoseconds. Now, the parent is covering up their indiscretions or is openly confused. You have grown into being one of his or her adult children yet, you could not have adequately foreseen this day, no matter how many books you have read.

Even more challenging is the common conclusion that your parent is not fully disabled or incapacitated. That would make things easier. The fact is your parent has just mentally slowed down. Black and white has turned to grey and there is no clear line of demarcation between the point where the parent can pay his or her own bills or handle money and the point at which the parent is no longer able to manage finances responsibly.

Children often grow to feel concerned and responsible. What if there is insufficient money? What if it is all lost or given away and none is left to take care of the parent? The burden might fall upon the children.

Yet, at the same time, respect for the parent demands gentleness and patience. The parent may resist any insinuation that they are slowing down. Independence has been a watchword of the parent for their entire lives.

We have a few ideas on how to address this, and more are being generated as we counsel with children and parents in these sensitive situations. Below are a few brief options you may want to consider if you find yourself acting on behalf of one or both of your parents:

1. A convenience account where a child can sign onto the parent's account, volunteering to help pay bills.

2. A revocable trust in which the parent and a child can be co-trustees. This can allow the parent to continue to be “in control”, pre-plan for subsequent greater disability, allow the child to sign checks at any time, and ultimately avoid probate at the parent's passing.

3. A revocable trust with a third-party as a trustee. The third-party can be an institution or a trusted advisor. While the parent may still control their own checking account, the trustee can make sure that bills can be attended to normally.

4. An irrevocable trust with the parent, children, and/or a third party as co-trustees. The main difference between this trust and the revocable trust mentioned above is the ability of the parent to alter the trust in the future. If a main concern is the lack of responsibility coupled with the possible influence of another person (such as, perhaps a second spouse), this structure allows some limitation on the ability of the parent to make swift and far reaching changes to the trust.

Balancing the need for action and the desire to honor parents and show them the respect they deserve is a challenge. Please let us know if we can help.