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For an adult child, being asked by your parents’ to manage their money can be a potential minefield. If  you have stayed out of your parents’ financial decisions until this point, it can be overwhelming to even know where to start. In addition, conflicts may arise with your siblings, other family members or parents themselves if others are not happy with your financial management style.

Whether it is for power of attorney situations or because your parents’ simply feel more confident having you take charge, tread carefully and keep in mind these four rules:

1) Understand the full financial picture.

Like any financial planner, you can’t do a good job managing someone’s investments unless you understand their situation, including how much risk they need to take, their annual expenses, income, assets and their personal risk tolerance. If you are not able to communicate or have access to the whole financial picture, then you simply can’t do a good job. Do not wait for an emergency or an illness to get yourself involved. Encourage them to explain to you their full financial picture now so you can be ready. Sit down with your parents and gather all important information (such as account numbers, passwords, company affiliations etc) in a document like the  Tridelta Financial Planning Questionnaire.

2) Don’t be afraid to use a professional.

Even if you manage your own money, you may want to work with a professional when handling your parents’ money.

There are three reasons for this:

1. It takes some of the responsibility and burden off of you and your siblings might be more comfortable in this setting
2. A good financial planner can often provide a wider range of insurance, investment, savings and tax options than you might be able to on your own
3. A planner in emotionally removed from the money. Especially when managing your parents’ money, emotions can wreck havoc on investment decisions

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3) Know how much capital is needed to support your parents.

If a parent might reasonably live to age 90, plan for age 95 and know the capital requirements. If their current amount won’t cover potential needs, you might be restricted in taking risks. However, if someone only requires $350,000 in income and has $1 million, it might be a mistake to be too conservative. Manage the necessary capital safely, but the other $650,00 should be managed based on a higher risk tolerance (for example, don’t make the mistake of an all-GIC portfolio).

4) Communicate with other family members.

In almost every case, there will be some criticism from other family members of how you are managing things. It is one of the reasons why it is sometimes better to hire a professional to take the heat. In any case, you can minimize criticism by communicating what you are doing, why you are doing it, and to get notional buy-in.

While it is a big responsibility to manage your parents’ money, remember these four tips and remember the ultimate reward of this: you parents’ and family’s appreciation.