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Preparing for Elderly Parents

Sooner or later most of us will have parents who become elderly. Some will notice how much their parents have aged when they got together over the Christmas New Year period or Easter. And then comes the worrying bit. How will Mum or Dad cope, and for that matter how well will you cope as increasing responsibility falls on your or your siblings’ shoulders.

Unfortunately, there comes a time when our elderly parents, who we thought could do anything and everything, need our help to manage their affairs. Dementia may be setting in or it is just the ageing process that makes it harder to process what used to be basic information. Filling out forms becomes a nightmare, and understanding directions or instructions is very confusing, especially if they are in writing and the fonts are small. And to cap it all off, everything these days seems to be for the computer literate.

The signs of inability to cope include piles of mail that haven’t been attended to, confusion about whether bills have been paid or not, inability to recall where money is invested and how much is invested and in some cases giving money away inappropriately.

Several years ago, we took an old family friend down to the bank, and discovered a bank account that he hadn’t used for years. It was no wonder he was confused over it as the bank had been purchased by a competitor several years earlier. There hadn’t been any recent transactions and no bank statements had been mailed to him for many months. The good news was that we tracked down $180,000 that he didn’t know he had.

It is a good idea to help older people with sorting out their paperwork, deciding what to keep and what to throw out, making sure that important correspondence is dealt with in a timely manner and ensuring that vital documents such as wills and insurance policies are up-to-date and stored safely.

Simplicity is the key to managing financial affairs late in life. Keep bank accounts to a minimum and make arrangements for bills to be paid by direct debit or automatic payment. If they have shares or bonds, have them reviewed. It can make sense to invest in a diversified portfolio, which may be managed with a longer-term view if there is no need for the monies to be used to fund their current or anticipated lifestyles as they age.

It also makes a lot of sense to set up a portfolio and have regular monthly withdraws to meet regular expenses. In most years, the returns would be expected to be greater than that obtainable with bank deposits and there is a lot more flexibility in the ability to meet unexpected expenses.

Conversations about living arrangements are important as many retirement villages now have lengthy waiting lists, so it pays to think ahead. While they are still healthy, find out what your parents’ preferences are for care if their health deteriorates. Enduring powers of attorney, which come into effect with loss of mental capacity, can be prepared by a lawyer to enable you to take care of financial affairs and personal welfare for your parents when the time comes. Make sure that this is done while they still have mental capacity. It can be a nightmare trying to arrange this when they are demented.

Above all, remember that the aged should be treated with dignity, respect and tact. There is a balancing act between allowing them to do as much as they can while they are able and stepping in to help avoid a financial crisis. Most of all enjoy the time you and your family have with them.


Steven Barton (FSP 32663) and Susan Pascoe Barton (FSP 32382) are Certified Financial Planners and Authorised Financial Advisers.  Their initial disclosure statements are available free of charge by contacting them on (07) 3060080 or they can be downloaded from www.pascoebarton.co.nz. This column is general in nature and should not be regarded as personalised investment advice.