Taking Care of Elderly Parent’s Finances

Physical or cognitive changes to a parent’s health can thrust children who have little knowledge of their parent’s finances to take control.  Here are some steps a family can take to prepare for the unexpected.

  1. Take notice of changes in a parent’s health. The earlier you recognized physical and cognitive changes in your parent health the earlier you can plan.
  2. General Discussions. Parent – child discussions should take place early rather than at the time of a crisis.  Preserving wealth and transferring wealth are reduced when decisions are made under stress.
  3. Prepare a listing of all items of value and documents. Include a written detailed listing showing names of bank accounts, brokerage accounts, life insurance, real estate, collectibles, jewelry, and other assets.  Include vital documents in the listing, such as wills, insurance policies, tax returns, trusts, health directives, power of attorney, and where they are kept.
  4. Prepare a power of attorney. In the event, a parent is no longer able to handle their financial affairs an assigned power of attorney will allow another person to oversee the finances.  Don’t wait, for a power of attorney to be valid, your parent must be competent at the time of signing.
  5. Validate the will. Make certain the will correctly stipulate how a parent wishes their assets to be divided after they are gone.
  6. Signs of financial abuse and exploitation. Unfortunately, older adults are often the victim of financial abuse and exploitation. Perpetrators include spouses, children, relatives, friends, identity theft, IRS scams, caregivers, contractors, unsolicited emails and telephone calls.   Factors such as loss of a spouse, loss of friends, sickness both physical ailments and mental changes, and loneliness all contribute to increasing the chances of a parent becoming a victim of financial abuse and exploitation.

Things you should know if a Parent Becomes Incapacitated

Communicating with Your Parents about Finances

  1. Know your parent’s annual expenses and create a budget.  Auto, home, medical expenses, insurance, taxes, utilities, and other expenses.
  1. Know your parent’s sources of annual income.  Dividends, interest, rental income, social security, pensions, and other.
  1. The names and contact information of their accountant, lawyer, and financial advisor.  What financial planning and estate planning has been done to protect assets?
  1. Does a durable power of attorney exist that covers finances?  If yes, who has it?
  1. What are and where are the assets and the names of all financial institutions.  Stocks, bonds, real estate, life insurance policies, annuities, and other.
  1. What are the liabilities?  Mortgage, auto, credit cards and other.
  1. Do they receive and are they eligible for government assistance.  Medicare, Medicaid, Veterans Benefits or Social Security.
  1. Is there any supplemental health insurance in addition to Medicare.  What is the coverage and is it adequate?
  1. Is there any long-term care insurance.  Where are the policies and what is the coverage?
  1. How are bills being paid?  Online, paper checks.  And, is it being done correctly?