Often times, elder people want their adult children to assist them in the paying of their bills. This tends to be in situations where the elderly person has enough capacity to express their desire for help, but not enough capacity to manage complicated finances. There are three main ways that the children can help take care of their parent’s finances.
The first way is to add one of the children to the parent’s accounts as a joint owner. This way the child can access the funds in those accounts to pay bills. If everybody acts in good faith, then this can be a really helpful thing for the elderly person. However, even if everybody acts in good faith, this can still be problematic for a few reasons.
The first reason is that upon the passing of a joint owner to an account, the other owner to that account receives all the funds in the account. So, when the elderly person passes, the child on the account would, then, receive the entirety of the assets. The elderly person might not realize they were essentially gifting all of the assets in those accounts to that one child. This gift can run contrary to what their Will says. In those instances, the child can choose to place the assets into a Probate instead of receiving all of them.
The second reason is that the child technically owns the assets in the accounts during the lifetime of the elderly person. So, if they get in a car accident or become liable in any other way, somebody could sue to obtain the assets in the joint account. This is independent of the child acting in bad faith and just plain taking the assets in the accounts. Even the nicest, most loving child can end up in a bad car accident and find themselves and the elderly person’s accounts on the barrel end of a law suit.
Another avenue in assisting an elderly loved one would be executing a Power Of Attorney. A Power Of Attorney is a document where the elderly person can name their child or any other person to act as an agent on their behalf. The specific term for the agent is an “attorney-in-fact.” The agent can then set up Power Of Attorney accounts for them to use for the elderly person’s care. These accounts would be funded with the elderly person’s funds and the agent would have a duty to use them in the best interest of the elderly person.
The downside is that the elderly person would not be able to access the accounts. Only the agent could access the accounts. This could be a positive if there are concerns that people might be trying to scam or apply undue influence on the elderly person.
The third main way is to place all the assets in a Trust and make a child (or children) Trustee. Then, the child would manage the Trust’s assets as Trustee and could ensure that the money is used appropriately. The downside is similar to the POA above where the elder could not access their own money, but that may be what is best for them under certain circumstances.
Caring for an elderly loved one can be complicated. The Law Offices Of Matthew B. Talbot, serving Walnut Creek, Lamorinda, Concord, Pleasant Hill and the greater Contra Costa County area, is here to help assist you during what can be a trying time. Please call us at 925 322 1763 to set up a free consultation.