Not Knowing About Your Parents Finances Could Hurt You – Part 2

In part one of this two-part blog post, I discussed the advantages of having a plan to deal with the issues related to your parent, or any family member, who is no longer able to live independently.  In part two, I’ve outlined below some general guidelines to consider when planning ahead:

Avoid the necessity of a court-appointed guardian. The publicity and proof needed to appoint a legal guardian when your parent is already incapacitated can be stressful for the entire family. A good alternative is to create a legal document called a durable power of attorney before an incapacitation occurs. A further step might be to implement a revocable living trust for your parent’s assets. If structured properly, this arrangement can provide for the smooth and controlled transfer of their assets after they pass away. The trust can also help minimize probate costs. Lastly, two additional legal documents should be put in place – a living will and a health care proxy. See a qualified attorney about these documents.

Determine your parents’ lifestyle and housing preferences. Begin asking your parents how they feel about what their friends have done in their retirement years. Do they want to age in their own home with help from you and/or a home health care provider? Or, are they interested in moving to assisted living or another type of retirement living arrangement? What plans, if any, have they put in place if they can’t take care of themselves? Knowing your parent’s preferences can help you sensitively guide them if their mental abilities deteriorate in the future.

Prepare an updated list of parents’ financial documents and passwords. One of the best things a parent can do for their child is to let them know what important documents exist and where they are in the event of their incapacitation. The documents on the list can be related to investment records, insurance policies, prescriptions, contact information for the professionals they work with, automobiles owned, military records, and yes, passwords. As we all are increasing our use of the internet for accessing financial accounts as well as social media accounts, having a list of current passwords could make handling things easier.

If they work with professional advisors, get to know them and encourage your parents to work with them. Some parents grew up in a house where money wasn’t discussed openly, so they may not be comfortable sharing the details of their finances with you. If that is the case, encourage them to work with their CERTIFIED FINANCIAL PLANNER™ professional, their CPA and/or their attorney. Qualified, trusted professionals will protect their privacy and can serve as your bridge to the financial information you will need when the time comes.

These simple steps can help you be effective at making the financial and lifestyle decisions that come along with taking care of a parent who is incapacitated. The key is to start early and progress slowly through the sensitive discussions that will help you, and your parents, plan for the future.

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