A few days ago I wrote a post saying that children should take responsibility for their parents portfolio. I got very strong reactions about the same, but generally saying the following:
1. It is to embarrassing to ask our parents about their money.
2. They will think I want to know how much I will inherit, so I will not ask.
3. My parents are very possessive, so I THINK they will not give up control.
4. My parents will NOT give up control.
5. I do not have time to talk to my parents (about money I guess!!).
6. Anyway I am supporting them – they will think I am asking so that I can stop.
7. My siblings will be suspicious, so I will not talk. In fact none of us do.
To me all this sound very genuine, and I know that there are people who will not be comfortable in delegating. In fact unless my daughter is in the Investment business, I would rather handle it myself 🙂 .
If suppose my daughter were a practicing doctor how comfortable would I be in handing over my portfolio to her? I will be not.
So the children have to prove the following to the parents:
1. There is no conflict of interest in managing the money: I know one son-in-law who put an old lady’s money in a LIC annuity plan WITH RETURN OF PREMIUM – this was done innocently, but the lady lost access to Rs. 500,000 at age 76. She died at the age of 82. If the amount had been kept in a bank, she would have got a much better yield and had full access to the money.
2. Show that you are competent: Not many parents like the way their kids handle their own money! How many people will be comfortable handing over the money to a person who they DO NOT THINK IS COMPETENT? I will not be, surely.
3. Communicate: Parents and Children are both a little hesitant talking about money. Make offers like saying ‘my office is planning to cover YOU for medical insurance…’ and such talk can be the starting point. Or saying ‘I have a guy coming to our office to file tax returns..do you want your returns filed by him…it is free’.
Even if these statements are not true (my friend flies his parents J class saying it is all from the travel miles accumulated – this is not always true, but saves him the need to accompany them on a journey and saves him a lot of time, and they fly comfortably keeping in touch a minute before take off !!)..
4. Do the paper work and co-ordinate on the tax forms like 15F, 15g, etc. -BANKS treat senior citizens shabbily. Link your accounts and make sure that they are in Imperia, Wealth, Privilege – ensures that work gets done better :-). My aunt leaves Rs. 2 million in her SB account AND GETS TREATED SHABBILY 🙂 caveat.
More to follow based on response 🙂
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