A reader, whose mother has dementia, asks HerMoney CEO Jean Chatzky how to consolidate her mom's accounts without creating a tax mess.
Twice a week, our CEO and resident money guru Jean Chatzky tackles your burning questions in the HerMoney newsletter. We’ve pulled some of the best to feature on our website — and this one made the cut! Got a question for Jean? Send it her way right here.
Q: Today’s question comes from Amanda. She writes: “My mom’s dementia has been advancing. I am in total control of finances. I want to consolidate accounts and get things organized, but don’t want to create any tax issues for her, and also would like to make things better tax-wise for myself and my brother when the time comes. Who would I need to talk to about this?”
A: First of all, I’m so sorry about what you’re going through with your mom. Dementia is a heartbreaking illness. I’m glad to hear that you’ve got the finances in check – but you’re right to look for advice as you look to set up a simpler structure in the future.
I’d loop in two people: an accountant or other tax professional and an estate planning attorney. Start with the professionals who have handled issues relating to your mom’s financial life in the past. Ask each of them your questions separately – and then have a conversation with both of them together. The reason? You want to make sure you don’t do something with one of them that is going to bump into the planning that the other is doing.
Finally, just a heads up that comes from something I learned reporting a column for AARP. As you go through the process of consolidating those accounts and communicating with your mom’s financial institutions, make sure you have a signed power of attorney (POA) document that each of those institutions will accept. Some financial institutions will not accept POAs drafted by an outside attorney. You don’t want to come to that realization when it’s too late.
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