Planning with Parents

Eric, from Chicago, asks about planning with parent’s finances.

What are some of the things that someone should consider when assisting with their parent’s finances?

  • Small adjustments on any of your parent’s accounts could have major changes down the road.
  • Do not make changes out of convenience, make sure that all decisions are carefully decided on.
  • Everyone’s situation is different, there is no cookie cutter solution.

How I find out what the taxes consequences will be if adjustments are made to my parent’s assets?

  • Working with a tax professional should give you guidance on what the impacts of the changes will look like.
  • Attorneys should also play a roll in any changes that take place.
  • There are usually community nonprofit resources that could help educate you on planning for and with parents.

What advice does Ryan have for people that are going to work with their parents as they head into retirement?

  • Work with a team of professional to make sure that you are making the right decision. (accountant, attorney, and retirement professionals)
  • Create a plan in writing to make sure that it is executed efficiently.
  • Make sure that everyone in the family is aware of the changes so that it will not be a surprise down the road.

On the latest addition of SFP question and answer, Ryan takes a question from Eric in Chicago. Eric ‘s father is getting up there in age, and Eric is in the process of assisting him with his finances. To make things more convenient for Eric and his dad, Eric is considering putting himself as the joint owner on some of his accounts. Eric ‘s question to Ryan is whether or not it makes sense to put himself along with his dad as the joint owner in the accounts.

Ryan runs into these types of situations all the time with his clients. Being a retirement specialist Ryan works with people who are in their late 50s too late 60s. So, this group of people obviously, has parents who are getting older and need assistance with their finances. Ryan warns Eric that putting himself as a joint owner on the account could be a major mistake in the future. Eric could lose his tax benefits when his father passes by being the joint owner, these benefits would become taxable, and Eric would be responsible for paying the taxes on the gains in his father’s accounts. This could be a gigantic difference in terms of what Eric would stand to inherit from his father. Ryan advocates that people who are looking to help or assist with their parent’s finances, as their parents are aging, should always consult a professional on these matters. An accountant or attorney will be able to guide you and advise you through this process. They should be able to tell you the pros and cons of each move before you make it. This way you will have a roadmap laid out for how you are going to navigate these difficult times. I work in these prefer with these professionals and having a written game plan you will be able to avoid Potential mistakes and maximize the inheritance left over.