As parents grow older, it is natural for families to experience a shift as children begin taking on more of a caretaking role. This shift can be a delicate process, and we have many clients come to us, asking whether it is wise to put their children in charge of their finances, estate, and affairs as they age. Today, we talk through some of the intricacies of this approach, recognizing that a different strategy will likely work for every family.
Power of Attorney
One way in which many parents give their children more responsibility is by making them “power of attorney,” authorizing their children to make decisions on their behalf. In Texas, a power of attorney can only act on behalf of an individual when explicitly authorized to do so.
Financially speaking, a power of attorney can manage a person’s business dealings if the individual wants someone else to take care of these dealings for them. In contrast, a medical power of attorney only becomes effective when an individual becomes incapacitated, allowing the power of attorney to make medical decisions in the individual’s best interest. Texas also offers the option of appointing a “limited power of attorney,” which allows individuals to appoint a power of attorney for one particular action, like purchasing a vehicle or handling tax-related matters.
Many aging adults find it comforting to appoint one of their adult children as power of attorney, with the stipulation that the power of attorney will only come into play in specific scenarios, whether medical, financial, or related to the person’s estate.
Another way to hand more power to your children is to make them trustees of any trust that you establish. By creating a trust, you can create a sort of protection around your assets, with explicit instructions for how the assets are to be divvied out. By naming a child as a trustee, you are essentially asserting that you trust your child to act in accordance with your desire and goal for the trust.
Appointing a child as your trustee allows you to put him or her in charge of one specific part of your estate. This can be helpful for families as they try to shift the burden of financial matters from one generation to the next.
Overall, putting children in charge of assets can be a tricky business. We recommend having structures in place to make sure your children are prepared and supported as they take on more responsibility, since tensions can easily arise if things go awry.
Are You Looking for an Estate Planning Attorney in Houston?
At McCulloch & Miller, we offer peace of mind for your family as you navigate the ever-changing process of aging and navigating your affairs with an eye toward the long-term future. We are a team of Texas estate planning attorneys with more than 35 years of experience practicing in estate planning and elder law, and we would be honored to work with your family as you consider the various options before you. For a consultation with a member of our team, call us today at 713-903-7879. You can also fill out our online form to have someone reach out to you as soon as possible.