| Gary Foreman is a former Certified Financial Planner (CFP) who currently writes
about family finances and edits
The Dollar Stretcher website
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Dear
Gary,
My 70-year-old mother lives alone a few miles away from two of her
five daughters. She's fiercely protective of her privacy and
independence. However, she cannot handle her money. We think she may
have early Alzheimer's. She's always been bad with bouncing checks
and having the utilities cut off for non-payment. But now she's much
worse. She gets a retirement pension which is about three times as
much as her normal monthly expenses, but she's always broke by the
15th of the month. So we're trying to get control of her
money.
Our plan is to open up a new
checking account for her pension to be automatically deposited in
that she will not have access to. We're going to change the address
on her bills and I will become the bill-payer. We'll give her an
allowance of $500 a month for groceries, gas, and other expenses,
which I think is very ample for a single person. Whatever doesn't go
for her bills will be put aside for an emergency fund and for future
medical bills. My sisters are all in agreement that something needs
to be done. Now we have to get our mother's cooperation.
--Natalie S.
Natalie's problem is a common one. As
people live longer more become frail in their later years and need
help with their financial affairs.
I'm assuming that Natalie only wants
what's best for her mother. The state can't assume that. So they
write laws to protect the rightful owner of property. In this case,
Natalie's mother. The presumption is that your mom is an adult, it's
her money and she should be able to spend (or squander) it anyway
that she thinks is appropriate without Natalie's approval.
So, the first thing is to get mom's
willing agreement. You're walking a tight rope. If she's truly
incompetent you might need to force the issue. But, if she's
mentally fit, coercing her is just like stealing her money and her
freedom.
 If mom doesn't want to give up
control of her money Natalie would need to go to court and prove
that she's not mentally capable of handling her affairs. In that
case the court will appoint a guardian. Even then there's no
guarantee that a relative will become the guardian. And Natalie's
relationship with her mother would probably be seriously harmed.
If mom is agreeable to getting help
from her children the job is much easier. You'll still need to
consult an attorney. This is too important to mess up.
The simplest solution to making sure
that bills get paid would be to have one or two children authorized
to write checks on mom's account. Then have the bills sent to the
child for payment. Unless a check limit was set at the bank, it
would allow the child to write a check for all of the money in the
account if they wanted.
Avoid joint accounts. Money in a
joint checking account legally belongs to everyone listed on the
account. So it's possible for mom's money to be taken to pay for a
daughter's debts.
Natalie could consider a limited
power of attorney. That's a legal document that's usually drawn by a
lawyer. It could allow one or more of the daughters to act on mom's
behalf in certain situations.
The problem with a power of attorney
is that banks are wary of them. Because they don't want to take a
legal risk it's easy for them to reject a power. That way they avoid
taking any chance that they're honoring a fake power and helping to
steal someone's money.
The most complicated but best legal
document for this type of situation is something called 'a living
trust'. A living trust is a document that any competent adult can
have created. They can also change it anytime they want as long as
they're alive and still ok mentally. An attorney should write it,
but they're not as complicated as you might think.
Property is placed under control of
the trust. In this case probably mom's checking account and the
proceeds from her pension. The trust says how the assets are to be
used.
Trustees are allowed to act within
the authority of the trust. Mom would be the original trustee. And
when she's not able, a successor trustee(s) would step in and take
over for her. Probably one or more daughters.
Natalie and her sisters are in a
sensitive position. If mom is truly not competent to take care of
herself then getting her help is the right thing to do. And loving
children would step in.
But being irresponsible doesn't mean
that someone is incompetent. And it doesn't give others the right to
take control of your property. So children would honor their parents
by respecting their freedom and giving only the help that the parent
requests.
Hopefully Natalie and her sisters
will be wise in striking the proper balance to help their mother.
--End--
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