Are Your Kids Making You Broke?

Here are 4 ways to break the cycle of feeling like an ATM machine

If your kids — or even your grandchildren — are making you broke, it's important to put an end to excessive financial handouts that could be driving you into debt.

As parents, it's natural to want to help our kids in every way possible. And for many people over 50, that means providing both emotional and financial support to adult children. 

In fact, according to a June 2011 Investor Index survey by TD Ameritrade, not only are Baby Boomer parents willing to come to their children's financial rescue, many parents are also sacrificing their retirement and economic security to do so. A recent AARP studyshows that 49 percent of adults age 46-65 say that they find it difficult to save for retirement.

And since the first Baby Boomers turn 65 this year, the highlights of the TD Ameritrade survey are all-the-more striking. Among the findings: 

• 67 percent of Boomers surveyed say they would feel obligated to financially support their adult children if asked
• 57 percent of those polled said they were willing to support their offspring even if it hurts their own retirement
• 54 percent of Boomers have had adult children live with them for at least three months
• 42 percent of those who did allow adult children to return home said doing so had a negative impact on their finances

So what's to be done?

Experts say a combination of tough love, fiscal discipline and good communication between family members are all required in order to help your children achieve financial independence — and help you salvage a comfortable retirement.

In cases of extreme financial dependence, which can sometimes veer into a financially abusive relationship, it may also be necessary to enlist the assistance of a third party if you need help in cutting the financial apron strings.Start With a Heart-to-Heart TalkAlthough many parents are reluctant to share the details of their financial circumstances with their children, when your kids are taxing your finances, it's a good idea to paint a realistic portrait of your situation. Explain to your children honestly what you can and cannot afford. Often times, children may mistakenly think that you are better off economically than you really are. There's no shame in telling your children that because of a host of reasons — perhaps the downturn in the stock market, the soft real estate market, your own work situation or expenses — you simply don't have a lot of extra cash to give or loan them. By candidly divulging at least some basic information about your own financial standing, your children may be less inclined to lean on you for economic help. "This is something that we deal with all the time and is always a very difficult conversation to have with a parent," says Jonathan Blumenthal, CFP and senior vice president at Peak Capital Investment Services. "However, the fact is, retirement is not a possibility when you are saddled with the expense of having to take care of adult children."Set Reasonable LimitsIf your child does request monetary help, only agree to provide financial support if you can realistically afford to do so without sacrificing your own retirement or seriously impacting your financial health. And if you do say "yes" to helping out a child, be sure to impose reasonable limits and boundaries.

"No parent wants to see their child struggle financially, but assistance should come within reason — and with firm expectations," says said Lule Demmissie, managing director of investment products and retirement at TD Ameritrade. "While food and housing might be reasonable, a data plan for your son's smartphone shouldn't come between you and your retirement." 

Encourage Financial Responsibility

Even if your child relies heavily on you for economic support, you can still try to encourage him or her to be fiscally responsible in some areas. For example, if your child is living at home, charge them a modest amount for rent and food, suggests Jesse Ryan, managing director at Accounting Principals.

"If the parents can afford it, take the money that the child is paying for rent and place it into savings for a 'move out' plan," Ryan adds.

Create a Gradual Transition Plan 

For those who have adult children that have returned to the nest, be polite but firm in making it clear that the current living arrangements are not meant to be permanent. In fact, you should create a gradual transition plan where you both agree that, over time, you will start decreasing the amount of financial support you are providing to your child.

The idea is to do this gradually, "so that it's not so shocking for your children," Ryan says. Similarly, Ryan recommends setting a timeframe of six months to one year or so when the adult child is expected to move out and start living on their own. "By that time they will have a nest egg for expenses and will be used to paying for themselves," says Ryan. 

Helping your child out of an occasional financial pinch can be emotionally rewarding for parents with the financial wherewithal to provide such economic help. But if you're an aging parent struggling with your own considerable bills, it really is necessary to establish proper financial boundaries so that your kids don't wind up driving you into debt.

Lynnette Khalfani-Cox, The Money Coach®

When a family member dies

When a loved one dies, you have to deal with the emotional pain and grief—and you also may have to handle his or her final affairs. And depending on whether your loved one made plans or executed an estate plan, the journey ahead of you may be longer and more difficult than expected.

Your immediate concern should be whether your loved one left instructions regarding the disposition of the body, or had in place a pre-paid funeral plan or life insurance intended to cover the costs of the funeral. If the loved one failed to mention these things to you, you may have to search for documents such as a will, trust, or list of accounts and belongings.

I advise all of my clients to make a list of all of their accounts, insurance policies, stocks, etc., for their family members. Without such a list or a will, the family members may have a difficult time tracking down all of the assets. You may also find this information in bank statements, as Kansas law requires these funds to be separately accounted for on behalf of the person who is deceased (known in legal terms as "the decedent").

If you are able to find information regarding the disposition of the body, consider yourself lucky. If you cannot, then you must consider several alternatives. You could choose earth interment, cremation, entombment, or donation of the body to a medical school or other recipient specified by Kansas law. If you choose interment, cremation, or entombment, how will you pay for the funeral? Do you have access to any of the loved one's bank accounts, either by being named a joint owner or by being designated as the payable-on-death (POD) beneficiary or by having a power of attorney (POA) over the deceased?

Typically, a POA terminates upon the maker's death, except that the attorney-in-fact can still make organ donations, authorize autopsies, or dispose of the body after the maker's death.

The funeral director will apply for a death certificate. If you are the decedent's executor, it will be your responsibility to inform other government offices (such as Social Security) of the death. Either you or the funeral home may request certified copies of the death certificate. If you choose to do so, contact the Vital Statistics Division of the Kansas Department of Health and Environment, www.kdheks.gov/vital/death.html.

Request at least six to 10 certified copies of the death certificate. That's because each institution in which the decedent owned stocks, bonds, or securities, and each insurance company that issued a life insurance policy on the decedent, will require a certified copy of the death certificate. In addition, the decedent may have owned other property, such as real estate, that requires a death certificate in order to be transferred.

Locating the will, trusts, transfer-on-death deeds, or other estate planning documents is sometimes difficult. If the decedent had an attorney, I strongly recommend that you consult with that attorney regarding those documents. The attorney might have the originals or copies stored at his or her office.

If the decedent owned assets in his or her sole name, then a probate administration may be necessary to transfer title to the rightful owner of those assets. Probate is a legal procedure through the court system, used to determine who will become the lawful owners of the decedent's property, whether that is determined through intestacy (no will) or testacy (existence of a will). The probate process also provides a vehicle for creditors to file their claims against the decedent.

There are exceptions, but as a general rule, if a will exists it must be probated. A will names an executor who is responsible for administering the decedent's assets and affairs. If the decedent left a trust, the trust names a trustee who is responsible for administering any of the decedent's property that is owned outside of probate. If you find either a will or a trust, but are not the named executor or trustee, you should immediately contact the person named.

By Alexandra R. English
To be continued in November.

Pet Safety: Debunking the Myths, Clarifying the Facts

You'd think by the time we've logged this many years of life, we'd be pretty good about knowing what to worry about — and what not to. But when it comes to our pets, it is often not the case.

Many people hang on to outdated or just plain wrong information about what can be dangerous to domestic animals. And once we've got these myths in our minds, it can be hard to let them go. At the same time, many of us aren't aware of very real dangers our pets encounter in our homes — ones that you can easily avoid once you know about them.

As a practicing veterinarian with more than 30 years' experience, I've got the latest information to help you separate the myths from the facts:

Myth: Chocolate is lethal in a small amount. I know this may surprise you, because you've heard it all your life, but your Labrador isn't going to drop dead after nibbling on a chocolate bar. A large dog would have to eat a lot of milk chocolate to get ill — more than a couple of pounds. That doesn't mean there's no risk to chocolate at all: The darker chocolate is and the smaller the dog, the more dangerous the substance can be. So don't give chocolate as a treat — but don't panic if your pet ingests a small bit.

Fact: Sugar-free sweetener is the real danger. Xylitol is a popular sweetener in sugar-free gums and candies, but it's deadly to pets. And, sadly, it's often very easy for dogs and cats to get a lethal dose after pulling some gum out of a guest's purse or snarfing up some sugar-free candies from a decorative bowl. So enjoy your low-cal goodies, but make sure to keep them out of your pet's reach.

Myth: Poultry bones mean a trip to the ER. I'm not suggesting you feed your chicken bone leftovers to your pet, but if your pooch chows down on one, don't worry. Most dogs will digest raw poultry bones without any problem. Cooked ones are a little more problematic because they have a tendency to splinter. Talk to your veterinarian if your pet shows any sign of illness, but don't freak out otherwise.

— Janie Airey/Getty Images

Fact: Yarn balls are dangerous for cats. Any kind of stringy object — yarn, ribbon, thread or even the juice-saturated string from a roast — can be dangerous to cats. Yes, they're attracted to such things, but if they eat them, as a playful kitten might, they often need surgery to save their lives. Be sure to keep a lid on your garbage and put all hobby projectssafely away when you're not working on them.

Myth: You need to avoid certain cleaning products. If you're a pet owner, chances are good that someone has forwarded you e-mails about a dog or cat who died after coming in contact with Febreze or Swiffer products. No one knows where these rumors started, but they've been floating around for so long that the ASPCA's Animal Poison Control Center looked at the claims. The bottom line: Both products are safe around pets when used as directed. (A good place to check on the reliability of e-mail information is on the Poison Control Center's websiteor on Snopes.com.)

Fact: Nonstick cookware can be toxic to birds. The kitchen seems a natural place to keep your cockatiel, since birds can be very messy and kitchen surfaces are designed for easy cleaning. But nonstick cookware gives off fumes at high temperatures that can kill a bird. While the cookware is safe at lower temperatures, the possibility of miscalculation is so real that it's best to keep birds out of the kitchen and to skip the nonstick cookware altogether.

Myth: Poinsettia leaves are poison. With holidays on the way, now's a good time to bring up the widespread idea that this traditional holiday greenery is poisonous. It's not: The worst your pet will get is a stomachache. If you like these plants, enjoy them in your home without worry.

Fact: Lilies can be lethal. Now that you've cleared some space in your mind by not worrying about poinsettias, put lilies in that spot. These flowers are pretty in the house or yard, but if you have pets, you're better off avoiding them, since pets can die from eating any part of the plant. 

Have a question about your pet? Join Dr. Becker in AARP's PetPals online community group.