Many Baby Boomers, like me, are sandwiched between caring for our children and our parents. If you’re lucky enough to still have your parents around, like I do, consider yourself blessed. With the many challenges that we face living between generations, one delicate duty is that some day you may have to take over your parents’ financial responsibilities.
Having these delicate conversations is important because when the time comes, through sickness or death, it’s better to be organized and learn your parents’ wishes when they are still able to communicate. It’s important that these conversations take place when all parties are in good health.
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According to a report by the Alzheimer’s Association, 5.2 million — or 1 in 8 Americans — over the age of 65 have Alzheimer’s disease. The same report also cites a study that estimates 13.9 percent of Americans over age 71 suffer from some form of dementia. If you suddenly had to take over your parents’ financial affairs, would you know where to start?
For the good of all the family, you should start getting organized as soon as possible. It will be a benefit to yourself and your parents. Here are 10 questions you need to ask.
1. Have they named a durable power of attorney to manage their finances?
The first step is to find out if they have named a Durable Power of Attorney (POA). Without a POA in place, you’ll have to go to court to get guardianship of your parents in order to access accounts on their behalf.
2. Where do they keep their financial records?
Whether they keep their money and documents in a bank, a safe or under the mattress, you need to know where to find records when you need them. Where are the keys or codes to lock boxes or safes?
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3. What are their bank account numbers and names of their financial institutions?
In addition to knowing where they keep their money, you need specifics on all account numbers. What banks do they use? Who is their mortgage company? Do they have an investment firm?
4. What are your parents’ monthly expenses?
Gather information on their mortgage, car payment, credit card debt, electric bill and other expenses.
5. How do they pay their bills?
If there are automatic deductions being taken out of a checking account, you need to know about it. Do they use online banking, or only paper checks?
6. How much is their annual income and where does it come from?
Do your parents receive a monthly pension check? Do they have dividends coming in from investments? Do they get money for a disability or alimony?
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7. Do they receive Medicare, Medicaid or Social Security?
If your parent becomes incapacitated, you may have to investigate the status and eligibility of government assistance.
8. What kind of medical health insurance do they have in addition to Medicare?
Do they have health insurance provided by an employer? If they are retired, are health benefits included as part of a pension?
9. Do they have long-term care insurance?
A “regular” health insurance plan does not cover the cost of assisted living or a nursing home. Did they purchase a long-term care insurance policy to cover the cost of those residences? If not, and they can no longer live on their own, what can they afford in terms of housing?
10. Do they have an accountant or financial planner?
Who is it and how do you contact them? Have they done any estate planning?
This list can be something that you not only apply to your parents but also to yourself. Making sure that you have a will and all necessary documents, account numbers and investment statements in drawer or file, where they can be found easily, will help make any transition go much more smoothly.
Having these conversations can be difficult or embarrassing for some people, but just as you care for your family when they’re alive, don’t you want to take care of them once they’re gone?
David Leto writes about family, finances, and retirement planning for the 50-plus person.