What would happen if you suddenly had to take over a parent’s finances? Unfortunately, this is the reality for many families due to illness or emergency situations. If this situation were to happen to you, we want to make sure you are prepared. Preparing yourself for how to manage your parent's finances and protect them before it is necessary creates a lot less stress in an already stressful situation.
Similarly, it may just be time to assist because of mismanagement or a decline in cognitive ability. Broaching this subject can be awkward and intrusive, but everyone will be better off in the long run with more transparency.
So how can you protect and manage your parent’s finances successfully?
Be Named the Durable Power of Attorney – This needs to be done as soon as possible, and before any emergency. This allows you to have access to their accounts if they become unable to manage them any longer. Without it, you will have to visit the court to get a guardianship set up to access their accounts on their behalf.
Know Where They Keep Financial Records – Be sure you know where they keep their money and important documents. This could be in a bank, safe, or even under the mattress. In the event of an emergency you may need to access them fast – so don’t delay the conversation.
Names of Financial Institutions and Account Numbers – It is important to know where their money is being kept and how to access them. In the event you need to withdraw, deposit, or pay a bill, you should know how to do so. Have them write down account numbers, passwords, usernames, and codes to give you access.
What Are Your Parent’s Monthly Expenses – Gather information on what bills they pay. Maybe it is a mortgage, car payment, credit cards, and other household expenses.
How They Pay Their Bills – You also need to know how they pay those bills so you can stay on top of them. It is possible things are automatically deducted from an account, or they mail in monthly checks. For the tech-savvy senior they may pay their bills online.
Their Monthly Income – Find out what money your parent receives on a monthly basis. This can be from insurance, government programs, pensions, or dividends. Make sure this can cover their monthly expenses, or cut back on expenses to help.
All of these tips will make it easier to handle when the time comes to take over or assist with your parent’s finances. By following this advice, you will be able to protect your parent’s finances from getting out of control.