Congratulations. You’ve been elected the family money manager.
Except nobody asked if you wanted the job, and there’s a good chance nobody trained you for it either.
Maybe Mom has started needing more help around the house. Dad can no longer keep track of the bills. Or they have decided to sell the family home and move into a retirement community.
Suddenly, you’re the person everyone calls. And alongside making sure your parents are safe and comfortable, you’re trying to figure out how to manage their money.
So, where do you start?
First, find out where everything is.
Before you can make financial decisions, you need to know what your parents have and where it’s held.
That means tracking down bank accounts, investments, pensions, insurance policies, regular bills and any outstanding debts.
You may discover accounts at several different institutions, paperwork that hasn’t been updated in years or investments nobody has looked at recently.
Start by getting everything organized. A consolidated picture of their finances makes it easier to understand what’s coming in, what’s going out and who needs to be contacted.
Mom sold the house. Now you’re responsible for managing the proceeds.
This is a situation we see with families transitioning into independent living or care homes.
Your parent sells the home they’ve lived in for 40 years and suddenly has a substantial amount of money sitting in the bank.
For some families, it’s the first time they’ve realized just how much their parents are worth.
But now that money needs to support them.
How much is their retirement residence going to cost each month? What happens if they eventually need additional care? Will their pension income cover most expenses, or will they need regular withdrawals from their investments?
And what happens if they live another 15 or 20 years?
These are the questions a cash flow plan needs to answer.
The goal isn’t simply to grow their investments. It’s to make sure they have enough money available to pay for their care and maintain their lifestyle, while accounting for inflation and changing expenses.
Being the person everyone calls doesn’t automatically give you financial authority.
One of the first things to confirm is whether your parents have an up-to-date will and powers of attorney.
In Ontario, a power of attorney for property can authorize someone to manage financial matters, while a power of attorney for personal care deals with decisions such as healthcare and housing.
Being someone’s adult child doesn’t automatically give you permission to access their accounts or make financial decisions.
You’ll also want to review beneficiary designations on applicable investments and insurance policies, and make sure these arrangements still reflect your parents’ wishes.
An estate lawyer can help clarify your responsibilities and whether anything needs updating.
Before you invest the money, look at the taxes and care costs.
Selling a principal residence is often exempt from capital gains tax, but the sale still needs to be reported to the CRA.
And once the proceeds are invested, the income they generate can affect your parents’ taxes.
It’s also worth reviewing whether they’re eligible for available medical expense claims or the Disability Tax Credit.
These details are important when you’re planning how their savings will support them over the coming years.
You can help your parents without managing every decision alone.
When you become responsible for a parent’s finances, you’re often juggling your own work, children and financial responsibilities at the same time.
At Smith Rogers Financial, we help families bring these pieces together. That can mean organizing accounts, reviewing investments, projecting future care costs and coordinating financial decisions with the family’s tax and estate plans.
Just as importantly, it means having someone who will pick up the phone, listen and help you understand what needs to happen next.
If you’re becoming responsible for your parents’ finances and aren’t sure where to begin, reach out to Smith Rogers Financial. Let’s make sure you and your family have a plan you can understand and people you can rely on.
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