Managing Finances for Family Members

I don’t have time to deal with my parents’ finances. I want to spend my visits with Mom being supportive. It’s difficult to be objective with someone you love.

Our parents are in their 90s, generally healthy but no longer mobile. My sister and I each live an airplane flight away, work full time and manage our own families. Mother and Dad will move soon to the assisted living facility they selected a decade ago. We are comfortable with the arrangements we have made for their care, but neither of us has the time to manage their finances. Our parents have trusted wealth advisors but they do not perform hands on daily money management services such as paying bills. My sister and I are having difficulty becoming “managers” for our own parents so it would be nice to have a trusted third party who can assume that role and keep us fully informed. Most importantly, we want to enjoy the time we have left with our parents and not spend it in awkward conversations over money matters.

The Dilemma

  • Clients have elderly parents in their 90’s
  • Father has dementia, mother uses a scooter; neither is mobile
  • The wife had been paying the couple’s bills but her vision is now impaired and she is easily confused
  • Both daughters live and work out of state
  • Parents’ home at the shore is in a Qualified Personal Residence Trust; they also own a condo
  • Utility and other vendor accounts were either under or overpaid; bank and credit card statements were not being reconciled and checks were occasionally returned for insufficient funds
  • Investment advisors were forced to liquidate assets to cover expenses with little or no advance notice
  • Daughters worried that their parents’ assets would not be sufficient to cover expenses
  • Medical expenses were not adequately tracked for tax purposes
  • Parents’ health issues required three full-time caregivers who, for lack of a formal system, used the backs of envelopes as time cards.

The OSI Solution

  • Visit the couple twice per month to gather and review all bills for payment
  • Establish online access to all bank and credit card accounts
  • Create a bi-monthly cash report incorporating all sources of income and expenses and projecting cash needs
  • Establish approval and reporting structure with the daughters; coordinate with wealth advisors and tax accountants to maximize use of cash and tax deductions
  • Create a quarterly spending analysis for the daughters and the wealth advisors to help them plan for parents’ cash needs
  • Create payroll system for caregivers
  • OSI’s expense analysis over 4 years led the family to move the parents out of assisted living and into their debt-free condo at a savings of $200K per year with no diminution of care
  • Clients paid no income taxes for 2 years due to the large unreimbursed medical expense deductions OSI tracks in a custom QuickBooks file
  • Asset liquidations from the managed investment accounts are now planned in advance
  • OSI manages caregiver employees’ time reporting and payroll
  • OSI prepares all reports and materials for the CPA at tax time
  • The daughters spend their time planning visits and outings with their parents and do the financial work with OSI via phone, fax and email “behind the scenes”

Additional OSI Services for Managing the Finances of a Family Member:

  • Bill paying and problem solving; cash forecasting
  • Personal bookkeeping
  • Organizing and filing bills, records and statements
  • Preparing tax-relevant materials for tax preparer
  • Monitoring insurance policy renewals and premiums
  • Creating systems for managing domestic employees: Pricing workers compensation insurance, managing time reporting and domestic payroll, making employee tax filings