Ask Liz Weston » parents

Dealing with parents’ financial crisis

lizweston — Mon, 18 Apr 2011 17:27:48 +0000

Dear Liz: My retired parents are in a financial crisis. They got behind on their credit cards while they were trying to pay the mortgage on their home of 41 years. That home is now in a short sale. An attorney has advised them to file for bankruptcy to discharge the credit card debt and any debt that might remain after the short sale. After the sale of the home, I need to relocate them to my state so that I can further assist them, but I’m not sure if any landlord will rent to them given their terrible credit history, which will look even worse after the bankruptcy. Right now they make too much to qualify for subsidized senior housing. Any advice would be greatly appreciated.

Answer: You’ll probably have better luck with mom-and-pop landlords than with the corporate kind that run huge complexes. The mom-and-pop types tend to have more flexibility with potential renters who have tattered credit, particularly if those renters can make substantial deposits. If your parents don’t have much cash left over after bankruptcy — and they probably won’t — you may need to front them some money or consider letting them live with you while they save up.

You also should get a better idea of what caused their financial train wreck to see what you can do to help avoid further crises. If they’re suffering from diminished capacity, you may need to talk to an elder law attorney about taking over their finances for them. If they’re chronic overspenders, they may benefit from budgeting classes from a nonprofit credit counseling agency or community college. Even if the only bad decision they made was to continue borrowing against their home rather than paying it off, they could still benefit from some financial education and advice about how to live within their means. A session with a fee-only financial planner could help you all figure out what that will look like.

5 questions you need to ask your parents

lizweston — Wed, 02 Sep 2009 15:00:27 +0000

photo credit: Paula Perez

Something very cool happened recently that made me glad, once again, that I get to do what I do.

A young woman I know through mutual friends asked me if I was the Liz Weston who wrote for MSN. When I said yes, she said my column “Steps you must take when someone dies” was helpful to her and her husband when his mom died six months ago.

She said the column provided the checklist they needed to tackle all the responsibilities they faced in settling the mother-in-law’s estate.

Furthermore, she said, the experience convinced her to talk to her own parents about the arrangements they’d made to deal with incapacity and death. Her parents had tried to talk to her about these issues before, but she’d always brushed them off, fearful of even listening to what they wanted to say.

Rationally, we know that talking about death won’t cause it to occur. But a lot of us hate to think about losing our parents. Still, knowing some details about your parents’ arrangements and finances can help enormously when the time comes that they die or you need to take over for them.

By overcoming her reluctance, my new friend was able to talk with her parents, put their minds at ease and create a binder filled with the information she would need if they became incapacitated or died.

Among the things it can be helpful to know:

Have your parents named someone to make medical and financial decisions for them, if they’re unable to do so for themselves? Who have they named, and have they formalized those choices by having powers of attorney drawn up? Having access to those documents can be critical in an emergency, so knowing where they’re kept and which attorney drafted them is important.
Have they discussed what kind of measures they want taken if they’re incapacitated? Some people would want every means necessary to be taken to stay alive as long as possible, while others would want to limit heroic measures.
Do they have long-term care insurance or a way to pay for nursing home or home care if they need it? Medicare doesn’t cover such costs, and Medicaid pays for nursing home care only for the poor. If your parents don’t have long-term care insurance or substantial savings, you may want to encourage them to meet with an elder law attorney to discuss their alternatives.
Do they have a will or living trust? If so, where is it kept?
Do they have a plan for distributing valuable and/or sentimental objects? Talking about inheritances can be an explosive topic in many families, but often parents can head off disputes by making it clear in advance who gets what.

For more on this topic, please read:

Teens stress about the economy–particularly girls

lizweston — Fri, 28 Aug 2009 15:00:29 +0000

photo credit: jocelynmarie

Snagging a date with that cute dude, getting good grades, banishing that zit. Yup, teen girls worry about a lot of stuff. Now add the economy and money to that list.

According to a survey from Bank of America and “Seventeen” magazine, teen girls are slightly more anxious about the economy (85 percent) vs. teen boys (75 percent).

Girls’ fears range from not having enough cash to pay for things they want – like lip gloss and mini dresses – to how to pay for the big, important stuff – like college.

The research, based on interviews in April with 2,000 teens ages 16-21, also shows:

Teen girls are more likely to be stressed about finding a way to pay for college than teen boys (69 percent vs. 59 percent).
40 percent of teen girls think their parents should bail them out of a tough money situation, no matter how old they are. (Ack!!)
About 65 percent of teens said they had changed their spending habits as a result of the economy.
4 in 10 teens have altered their college plans because of the economic slowdown, while 1 in 5 had to either go with their second choice of college because of cost or attend a state school instead of a private one to save money.

Whoa – some of you are in need of a reality check. (C’mon girls – your parents should bail you out no matter how old you are?!) Getting a financial education doesn’t cost. Teens and parents can start below with a few MSN columns:

Incapacitated parent? Tread carefully

lizweston — Mon, 04 May 2009 23:37:27 +0000

Dear Liz: My father-in-law was diagnosed with Parkinson’s disease a few years back and his condition has steadily worsened. He can no longer write checks or keep track of due dates. My mother-in-law now must step in to maintain the family’s books, which she has never done before. I hope to work with her to develop a basic budget, but therein lies another problem. My father-in-law has made a very decent living and until he became sick, neither of them needed to worry about basic daily expenses or even small luxuries. As the medical bills mount, she is concerned that expenses are outpacing income, but he is reluctant to economize. To develop a budget would mean confronting his illness head-on, something he has managed to avoid for almost four years. Do you have any advice on handling this process of ceding financial control from an ill spouse to the partner?

Answer: Incapacity is hard for everyone involved, but failing to acknowledge the new reality could leave your in-laws in dire financial straits.

It often helps to involve a trusted third party who is not a family member. Your father-in-law may well resent your intrusion into their finances but may be willing to work with an accountant or a financial planner, particularly if it’s framed as a way to help his wife deal with her new responsibilities.

Your in-laws also should consult an attorney experienced in estate planning and elder care issues. At some point, paying for long-term care is likely to be an issue, and an attorney knowledgeable in this area can make appropriate recommendations.

Whatever you do, tread softly. You don’t have this disease and can’t know how he feels — or how she feels, for that matter. Offer to help, give your support, research and recommend appropriate resources, but try not to judge or impose your idea of a solution on this couple. This is their path to walk, not yours.