it the triple-whammy: An elderly parent, a new
significant other and an aging bull market.
reader recently shared his frustrations over watching
his elderly father gift a large portion of his assets to
a new, much-younger girlfriend. He is his fatherís
designated power of attorney but learned quickly through
his attorney that thereís not a lot he can do about
the situation because the father hasnít been declared
(often by a physician) to be incapacitated.
months or years leading up to a determination that would
trigger a power of attorney designation are complex and
often emotionally painful.
as interest rates remain at historically low levels and
market prognosticators trim their expectations for stock
and bond portfolio returns in coming years, families are
concerned about a combination of big withdrawals and low
returns at the end of life that will ultimately decimate
the eldersí savings and leave adult children on the
hook to make up the difference.
of the worst financial abusers are the very children or
other relatives who are supposed to be looking out for
these seniors, experts say.
the old he-said, she-said," says Martin Shenkman, a
New Jersey tax and estate planning attorney. "Is
the new girlfriend unduly influencing the senior or
taking incredible care of him, and itís the children
who are just trying to save their inheritance? Often,
nobody (considered a neutral party) knows."
to document examples of financial mismanagement is a
common first step but can also be fraught with
consequences, experts say.
Whitenack, an estate planning attorney and president of
the National Academy of Elder Law Attorneys, said she
has seen many families pulled apart as children fight in
court to take control of parentsí assets.
if the children lose, the parents by then are so angry
they cut the kids off completely," she said.
issues are always tricky, as any parent knows who has
contemplated leaving assets to children according to
their perceived needs rather than splitting them
equally. On that front, many families have learned that
childrenís circumstances can often change over time
and that giving different amounts can permanently damage
sibling relationships long after the parents are gone.
an estate equally puts the onus on the children, not the
parents, to be good stewards of the money.
other words, simpler is sometimes better.
the theory behind financial planner Satoru
"San" Asatoís retirement income planning
with clients, he said.
client, a mentally fit and affluent woman in her early
80s, began dating a man with very few financial
resources, prompting an adult child, her power of
attorney, to voice some concerns.
makes the situation manageable for us is our
process," Asato said. When the woman first became a
client, they agreed that the goal of her financial plan
was to spend her assets down completely, with no
software and a withdrawal discipline that can respond to
investment return volatility and a planning horizon five
years beyond a conservative life expectancy estimate, heís
confident she wonít exhaust the funds. If for some
reason it begins to look like she might, she can tap
home equity. If not, then the home becomes the asset she
passes down to heirs.
tell clients, ĎMy interest is in you staying
financially independent for the rest of your life, and
weíre going to (aim to) spend all that money down to
zero,í" Asato said. "When I say that they
are initially shocked, but by the time we discuss it a
little bit they all say, yes, I want to stay independent
and any money leftover and the real estate can go to the
I explain this to (clientsí) kids, they are relieved
to know they wonít need to fund income security for
their parents in retirement," he said. Resolving
some of the kidsí unknowns about their parentsí plan
tends to dissipate a lot of concerns, he said.
upfront income planning also helps clients themselves
keep some perspective on their assets as their personal
relationships change, he said.
I explain what the income is theyíll have off of their
assets, women clients in particular are able to stay on
budget so they donít jeopardize that income."
doesnít try to tackle getting into detail about what,
or who, clients spend their money on. Again, simpler is
better, he said.