On this week’s episode of The Long View, our guest was Elliott Appel, a financial planner and founder of Kindness Financial Planning. We appreciated Appel’s tangible tips for people helping their aging parents, but more than that, we were touched by his openness about his personal story.
His latest book, How to Help Your Parents As They Age: A Financial Planner’s Guide to Caregiving, chronicles his father’s last years and the lessons Appel learned along the way.
We invite you to enjoy the full episode, and we’re also highlighting an excerpt below in which he talks about an unexpected consequence of adding yourself to a parent’s bank account.
How to Keep an Eye on a Parent’s Accounts
Christine Benz: As an adult child, maybe a trusted adult child, what’s the best way to provide oversight of what’s going on with [financial] accounts? You caution against being listed as a co-owner on accounts. Maybe you can talk about why you don’t think that’s an optimal choice. But what’s a better way if someone wants to keep track of what’s going on with the comings and goings in the checking account as well as in the investment accounts?
Elliott Appel: The ideal way for me is to get added as that agent for the durable power of attorney for finances because it’s going to give the ability to move money and help with the account. Let’s say your parent is hospitalized and you need to pay a bill on their behalf, and you want to pay it out of the account; you’ll actually be able to do that. The next step down, a lot of financial institutions have a view-only authorization where you can view what’s going on, but it’s not actually going to give you the ability to do anything in the account. So, that would be, “Hey, my parents aren’t necessarily comfortable adding me, but I want to see what’s going on and help monitor it,” in your scenario.
And then the last thing would be a trusted contact on an account, which isn’t going to give you any visibility into something that happens, but if the financial institution suspects there’s an issue or there’s fraud or something else going on, it gives them the ability to call you. It’s not my favorite, but it is a good sort of last line of defense. And then your question about why would I not put my child or my parent on the same account as a joint accountholder. I would not do that because you’re introducing new risk for your parent. If you add your adult child as an additional accountholder, if they get divorced, if they get brought into a lawsuit, if they have creditors they can’t pay, that money can be brought in. I think a lot of people have good intentions with this. They say, “OK, it’s a small checking account. I’m going to add them just to help pay bills. There’s only ever a small amount in there.”
But I remember really vividly talking to an attorney once about this, and they told me a story about that same exact scenario; it was supposed to be a small account, but unfortunately some home proceeds got deposited into the supposedly small account and never got moved to an investment account as they anticipated. The person ended up dying, and then all of the home proceeds—and we’re talking north of $500,000—went to that sibling, and that never got shared among the siblings. It just went to that person in particular. I think a lot of people operate off the assumption that what’s happening today is what will happen in the future, but that doesn’t always happen. We want to put processes and systems in place so if the out-of-the-ordinary happens, we’re not subjecting ourselves to strange family dynamics or money going to places we don’t want it to go.
Put Your Parents on Your Cellphone Plan
Amy Arnott: You also mentioned the idea of the adult child putting the parents on the adult child’s cellphone plan. What pain points does that help circumvent?
Appel: So, all my stories come from a personal pain point that I experienced, and this one in particular, I remember my dad lost his phone. He was hospitalized, and I spent a good portion, at least half a day, running around to get my dad a new phone. I was not on his plan. He’s in the hospital. We had to get the eldercare consultant involved. We had to get a signed note from my dad, a driver’s license, or an ID copy. I had to bring that to the store, which, of course, was across town, bring that in, get added to the account, and then have the eldercare consultant go purchase the phone.
Whereas if we were just on the same cellphone plan, or I was an authorized representative on his, it would’ve been a really simple phone call to get this all resolved and access to his account, but he didn’t know the PIN because he forgot it. He didn’t have his phone. It was like the storm that was perfect, and it was all for a new cellphone, and that took up half a day. I think whether it’s a utility bill, a cellphone plan, something like that, all these people who are hard to talk to unless you’re on the account, I’d recommend getting added in some capacity.
Why You Might Need to Hire a Money Manager
Benz: In the book, you discuss a lot of professionals that one might hire to help with various aspects of this. One was a daily money manager. Can you talk about what that is and in what situations hiring one might be the right call?
Appel: Think about this person as the person who can, one, primarily help pay bills. Now, I hope most people have as many things on auto pay as possible, and that’s a big thing. When I talk to older folks, some are resistant to that, but I think we can make some progress there. But then, make sure things like medical claims are processed correctly. They can help sort mail with your loved one. They can sit down and help them pay those bills together if they don’t want to put it on auto pay. They can reconcile accounts and organize tax documents.
Think about this as sort of the administrative person that is helping your loved one, and they have some credentials and some safeguards behind that in helping them. I think it’s really helpful to hire them when it’s clear that your loved one can’t handle it or it starts to become an issue, and you don’t necessarily want to step in and/or your loved one doesn’t necessarily want you involved in their finances at that point. It’s one of those things where if you have the ability to do it, your parent trusts you, I’d say hop in and do that, but our time is stretched thin. So, as much as you can outsource certain things so you can focus on maybe more important things, you have to weigh when that makes sense.