For about a year, I have been helping a 50ish Bakersfield man develop his retirement plan. A manager at a local company, the man and his wife divorced in 2008. As a result, his "family" income is greatly reduced and half of his savings went to his now ex-wife. He also is paying monthly support for his teenage daughter.
But the reason he came to see me last week was not to seek help with his finances. It was to discuss his mother's.
My client and his father were very close. The two men spoke at length about the father's investments and retirement plans. The mother left the "paperwork" -- paying bills, investing, etc. -- to her husband.
Four months ago, the father died suddenly of a heart attack. The son stepped in to help his mother make funeral arrangements and take over his father's "paperwork" responsibilities. The distraught mother initially was grateful.
But with the passage of time, the mother has asserted herself. She wants control over her finances. The son believes his mother is incapable of managing her affairs.
The relationship between the mother and son has deteriorated. The mother has accused her son of "ripping her off." The son fears he could be unjustly accused of wrongdoing.
My advice: Take a deep breath. If he continues to maintain a tight grip over his mother's finances, he could be accused of "financial elder abuse."
Financial elder abuse applies to people 65 years of age and older. State and federal laws punish people who abuse elders. Generally we consider financial elder abuse to be scams perpetrated by strangers. An example of this is the "grandma phone scam," where a stranger poses as a grandchild in trouble seeking "grandma's" financial help. We also have heard of cases where caregivers, such as live-in helpers, siphon money from an elderly person's bank accounts.
But another form of abuse is perpetrated by family members -- sons, daughters, grandchildren, etc. -- who exert influence over an elderly person, with the goal of obtaining financial control to enrich themselves.
I recommended my client consider:
RESPECT: View the situation from his mother's point of view. As he resented "parental interference" when he was a young man, his mother likely is resenting her son's "interference" as she rebuilds her life. Respect her desires and capabilities.
ENLIST 'EXPERTS': A financial planner can help develop a financial plan. An accountant can help address tax implications. An attorney can help revise wills and trusts.
MOTHER'S NEEDS: The mother's expert "team," which could and likely should include family members, must focus on the mother's needs and desires.
When I talk to people about handling their parents' finances, I stress that they should bring in professionals from various fields to help. Even though they may be more than capable of handling everything, hiring outside help gives children "protection" -- not just from accusations of financial elder abuse, but from being sued by siblings and other family members.
Steven Van Metre is a Bakersfield financial planner who specializes in retirement income strategies. His website is www.MyRetirementPlanningCoach.Com.