There comes a time in life when you will need to take over your parent's finances as they age. In the event of an emergency, it’s good to be prepared incase they are no longer able to make decisions. If they were to become incapacitated someone needs to take over managing their money and ensuring bills are paid on time.
So what are some things you should consider to be prepared for the future?
Have they named someone a durable power of attorney?
One of the first things to consider is if they have appointed a Durable Power of Attorney (POA). A POA is a document that will give you financial guardianship of their behalf. To get this started, please visit a local attorney in your area.
What accounts do they have open?
It is important to establish what kind of financial accounts they have in their name. This can be bank accounts, saving accounts, retirement funds, stocks and anywhere else they have money. Make a list of the names of financial institutions and account numbers.
Where are their financial records and personal information?
Find out if they have a place where they store vital information about their finances. It may be in a filing cabinet, under the mattress or in lockboxes. Some examples to ask about are birth certificates, social security cards, account login information and lockbox keys.
When and how are bills paid?
What days are bills due? Are bills like water, electric, and mortgage (or rent) automatically deducted out of their account or do they mail a check? Figuring out this information will ensure no bills become overdue.
What monthly checks do they receive?
Be sure to talk to them about what money comes in on a monthly basis. Ask your parent if they receive Medicare, Medicaid, or Social Security. Also ask them if they receive things like pension, alimony, disability or dividends from investments.
Depending on how complicated their finances are and how diverse their investments, you may decide to enlist the help of a financial planner or accountant to help manage their finances. Also, be sure to involve your siblings in making major financial decisions for your parents. It is important that everyone be on the same page with big decisions.
Need help on starting the conversation? Check out our eBook ‘Tips for Talking with Mom and Dad.'