Some Boomers Make Big Mistakes Managing Their Parents Money
As members of the senior market age, they often look to their baby boomer children for help with their finances. This is a time when seniors need their retirement accounts managed, long term care issues addressed, andfor those with larger estateslife insurance and estate planning strategies monitored.
But boomers, in their good faith attempt to do things themselves, are making some big mistakes, according to planners who are working in this market.
Often, the steps boomers take to gain control of their parents assets are “really erroneous,” says Kendall Blunt, regional director for MassMutual out of Portland, Ore.
“You see mistakes every time you turn the corner,” adds Dennis Cobb, a financial planner with Waddell and Reed in Dudley, Mass.
Cobb explains that hes seen many instances where boomers have taken their parents investment accounts and placed them in a low interest checking or savings account. “They take away the growth of their money because theyre trying to protect their inheritance,” he continues.
Usually, boomers will move money into an account with their name on it; this is also an attempt to help their parents qualify for Medicaid if the need for long term care should arise, Cobb explains.
“They want the money out of their parents name,” he says.
But this type of strategy can cause a number of other problems for boomers, adds Blunt. A common strategy that boomers use is to simply add their name to their parents investment accounts. But, Blunt adds, “technically thats a gift to the children and can create some negative tax consequences.”