Offspring should be aware of their parents' finances

August 29, 1993|By Boston Globe

BOSTON -- A few years ago a client came to Michael H. Davis, a Florida financial planner. The client's mother had become ill and could no longer manage her financial affairs, so a court had made the son her legal guardian. Since then, the son had found a few bank books around her house. A thorough search turned up more, a lot more.

"The woman had over 20 different bank accounts," Mr. Davis recalls. "She had bank books in her car, in her dresser drawers, even under the mattress." The son wrote letters to every financial institution in the area, asking if they had any records of his mother. "Several said they did," Mr. Davis says.

Eventually Mr. Davis and the son turned up more than $500,000 in various bank accounts and certificates of deposit. "It took almost a year to straighten things out," he says. "It was just a nightmare."

That odyssey might have been avoided, Mr. Davis says, if the son and his mother had had some conversations about her financial affairs before she became ill. Mr. Davis acknowledges that conversations about parents' money are difficult, if not impossible, for many people, but that doesn't make them any less necessary.

"Children don't want to appear greedy," he says. "They don't want it to look like they're asking: 'How much am I going to get out of them?' "

But not asking can lead to more problems, and perhaps more bad feelings, which can be avoided.

And as Mr. Davis learned, a parent's death may not be as serious as a mental or physical incapacity. "If somebody dies, eventually you find out about their affairs," says F. Davis Dassori Jr., a lawyer with Choate Hall & Stewart in Boston. "But if they're incapacitated, it becomes much more difficult."

If children know a little about their parents' financial affairs, they may be able to help in another way, by providing another set of eyes to check out investment proposals. If someone is trying to sell a limited partnership to an 80-year-old widow who needs income and safety of principal, the child may be able to stop it.

On the other hand, "There's no reason to think the children will be any better at this than the parents," says Barry Guthary, director of the securities division in the Massachusetts secretary of state's office. In cases like that, the child can at least help find an independent third party, like an accountant or lawyer, to check out the investment proposal.

Perhaps the easiest, and least threatening way for families to start a dialogue about money is to focus on the location, rather than the size of certain assets.

"For the first step, just ask where things are," says Carol Berman, a Massachusetts financial planner. This means finding out the location of wills, the names of banks where the parent has accounts and safe-deposit boxes, the names and addresses of lawyers, brokers, financial planners or anyone else who is working with their financial affairs.

"There are two kinds of knowledge," Mr. Dassori says. "There are facts and there's the knowledge of how to get facts if you need them. A child can say to the parent, 'You don't have to tell me what's in the documents. I don't need to know the details now. But I'm afraid if something happened to you I wouldn't be able to take care of you until you got better.' "

Mothers and fathers should help in this effort, too, by making a list of their major assets, and the names, addresses and %J telephone numbers of lawyers and financial professionals they might be working with, then at least telling their children how to find the list. In addition to the list of assets, adult children and their parents need to discuss the location of the will, a durable power of attorney and a health care proxy.

Sometimes, adult children and their parents simply cannot get any financial discussions going. The parents don't want to talk about it, the children are still afraid of looking greedy, or family members don't get along well enough to discuss such a sensitive subject. In these cases, a third party might be brought in.

"I sometimes volunteer to be the intermediary or work with the estate planning attorney in cases like this," Mr. Davis says.

The best solution, though, is to start early, years before a crisis arrives.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.