Jul 29, 2024
You might think taking the reins of a parent’s real estate portfolio amounts to a tasty proposition — especially when the patriarch is referred to in a July Forbes piece as “Wealthy Dad.” And this papa, it turns out, owned eight single-family homes in “one of the most expensive” U.S. markets.
But in the case of one perplexed son, problems connected to his father’s aging and forgetfulness created a giant mess.
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The son was apparently unable to locate important documents as his father’s memory slipped. His father was unhelpful in tracking anything down, insisting that “everything’s taken care of,” while vaguely referencing a bank safety deposit box. Meanwhile, the homes were vacant and falling into disrepair.
It was as if the son were “witnessing a nightmare.”
Anxiety set in and the son began to see a psychologist as he worked to untangle the personal and property troubles. His multifaceted dilemma points to a situation many adult children face: how to manage the affairs of a parent who may be cognitively in decline yet unwilling to release control when the moment of financial truth arrives.
No will, but still a way
The son’s situation didn’t get any less complicated when he finally convinced his father to let him access the deposit box, only to discover what wasn’t in it — as in, no will, no trust nor any income records.
How common are situations such as this? In the case of wills, the statistics are disconcerting. An August 2023 report by the Center for Retirement Research at Boston College shows that, where the head of the household is 70 or older, the number who had a will dropped steadily from 72% in 1996 to 63% in 2018.
In general, staying on top of income records can pose a challenge. The Social Security Administration acknowledged as recently as 2021 that research pointed to “survey-reported income measures, particularly pension and retirement income, suffer from reporting errors, which lead to biased estimates of income.”
Outside help is often needed to organize such convoluted financial and family dynamics. In these cases, families might pick up the phone and call a lawyer or financial adviser to coldly set things straight.
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But there are alternatives. Some firms specialize in family conflict resolution, aiming to consult on both the legal and mental health aspects of familial strife. Remember, the son himself felt the need to see a psychologist. Beware, however, these services can sometimes cost a pretty penny.
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A stance of persistence
Tax issues, repairs and other complications — at this point, many of the properties were “visibly falling into ruin” — could have plagued the son in the absence of an estate plan.
He lacked the legal authority to act on his father’s behalf, who initially refused to discuss getting a will and trust — a decision that can lead to chaos. Eventually, the son prevailed in changing his father’s mind, and the properties were placed in a trust, which saved “countless” dollars and headed off the dreaded legal fate of probate when the father died several months later.
The son was also able to tackle the necessary repairs to the homes on behalf of his father and rent them out again.
It would’ve been simpler if the homes were the only things that required fixing. The prevailing lesson here revolves around how complication can block communication.
“If the elder resists talking about it, persist,” article author Carolyn Rosenblatt advised. “Keep asking. Deal with their resistance. If you don’t, you may be in for a nasty surprise.”
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Lou Carlozo is a freelance contributor to Moneywise.
