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Why You Need to Talk to Your Adult Children about Your Finances
By Douglas Goldstein CFP® - helping olim handle their U.S. investments from Israel
Do you find it difficult to discuss with your adult children what should happen with your finances towards the end of your life?
If so, you’re not alone.
People don’t like thinking about their own mortality or losing control. Moreover, as family relationships aren’t always easy, discussing issues such as power of attorney, healthcare proxies, and estate planning can get very complicated. For these reasons, many families push off this conversation for as long as possible.
If you don’t speak with your adult children about your finances, they may have difficulty picking up the pieces and taking care of you and your affairs if you become too infirm to take care of yourself. The emotional and monetary effects of taking care of an elderly parent without any direction can be very hard, especially if your adult children are raising families of their own at the same time.
How to have “the talk”
The best way to let your adult children into your finances is to talk with them. If you can’t physically do that for any reason, compose a list of all your assets, where they are, what you want to happen when you’re no longer able to look after yourself, who would take care of you, and other important issues. Make sure to sign the appropriate documents so your children have the legal means to make financial decisions on your behalf (Power of Attorney, Trading Authorization, etc.)
If you have a financial advisor, invite your adult children to the attend meetings. Let them know who helps you with your finances and who to ask for reliable, objective advice when necessary. While you can’t ever know exactly how long you will live or stay healthy, taking a disciplined approach and sharing your financial situation, goals, and strategies can save a lot of heartache for everyone down the road.
For more about why sharing your finances with your adult children is so important, listen to Tim Prosch, author of The Other Talk, on The Goldstein on Gelt Show at here.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
When Should You Give Trading Authority to Your Children?
By Douglas Goldstein, CFP®
Recently, one of my clients had a serious fall at home, breaking his hip, and ended up in the hospital. As a result of his injuries, it was clear that he could not deal with his finances for the foreseeable future and had to hand over trading authority to his daughter. As this all happened suddenly, decisions had to be made in a hurry, leading to mediocre results. If my client, who is over 80, had agreed to hand over trading authority earlier, he and his daughter would have been better prepared for a scenario where he could no longer make financial decisions.
What is trading authority?
A trading authority form is a legal document that allows someone else to act as your agent over your account. Your agent can have limited trading authority, which means that he can make transactions on your behalf but not withdraw any money, or full trading authority, which means he can make withdrawals from your account.
A trading authority is similar to power of attorney. However, whereas power of attorney can be applied to all of your assets or to different aspects of your life, such as health care, trading authority only relates to your investment account.
Why should I give anyone trading authority?
Advanced age is not the only reason for granting someone else trading authority. What if you were going away on a sabbatical or a long vacation? Handling your account on a day-to-day basis may not be practical, so you would ask someone trustworthy to do it for you.
As you get older, even if you are in perfect health, it may be wise to give trading to someone you trust to keep your best interests in mind. Then you can work together with him, handing over the reins gradually, before the time comes when you may no longer be able to be in full control. At the same time, if you are thinking of handing trading authority over to a friend or relative, make sure that it is only someone whom you can trust implicitly because a wrong decision can put your finances at serious risk.
For more information about trading authority or power of attorney, watch a 3-minute video that I made called, “Should I give someone power of attorney?” at: http://profile-financial.com/poa.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.