8 Things You Should Know about Your Parents’ Finances

Written By: Desiree Kaul

If you suddenly had to take over your parents’ finances, would you be prepared? Although many of us don’t want to think about a time when we will be the caregiver for our parents, it is better to find out the information you will need before a crisis happens. Here are some things you should know.

What legal documents have they created to manage their finances? There are a few documents that will be needed to take care of someone else’s finances. First, is a durable power of attorney (DPOA) for finances. The DPOA gives a designated person the authority to make legal and financial decisions on behalf of the DPOA creator, and survives incapacitation. Many states have the template forms available online, or they can be obtained through Legal Aid offices, or elder legal services providers at no charge. However, if the matter is complicated, you may need
to seek an attorney which could incur additional costs.

Second, is a will and/or a living trust. A will designates how a person’s assets and estate will be distributed among beneficiaries after his/her death. A living trust gives a designated person (the trustee) the authority to hold and distribute the property and funds.

How much is their annual income, and where does it come from? You will need to find out what sources of income your parents have in order to pay their bills for them. If they are still employed, then they will have a paycheck that may come weekly, bi-weekly, or monthly. Other sources of income include: Social Security or survivors benefits, pensions, and dividends from investments, disability benefits, and alimony. Similar to a paycheck, you will want to find out the frequency of other income sources.

What are their monthly expenses? How do they pay their bills? Now that you have a source of income, you need to find out about expenses like: a mortgage, car payment(s), credit card debt, utilities, and other expenses. You will also want to take note of when these expenses are due each month.

Do they pay their bills online, by automatic withdrawals, in cash, or paper checks? Maybe they use a combination of these things. Make sure you have a list of each expense and how it is paid.

Where do they keep their financial records? Do they have an accountant or financial planner? You will need to know where they keep financial documents—in a bank, a filing cabinet, a safe? Remember to get access to keys or lock codes in order to obtain these documents. You will need What are the names of their financial institutions and the account numbers? You will need a list of all financial institutions that they use. They may have more than one checking or savings account with different banks. Who is their mortgage lender or servicer? Where are their investments? In addition, make notes of their account numbers or at least where to find this information if you need it.

What kind of medical health insurance do they have? Does your parent have health insurance provided by an employer or as part of a retirement benefit? Are they solely reliant on Medicare or Medicaid? Do they have a supplemental health insurance plan? Again, make sure to know what type of health plan they have and the policy number.

Have they created any medical directives? Health directives are just as important to have in place as legal financial documents. Some of these are: advance directives or medical power of attorney (POA), do not resuscitate form (DNR), and a living will. Advance directives or medical POA are written instructions about future medical care should your parent be unable to make decisions. For example, if they are unconscious or unable to communicate, a DNR form instructs health care professionals not to perform resuscitation in a case of a stopped heart or stopped breathing.

A living will describes and instructs how the person wants end-of-life care managed and usually takes effect in cases of terminal illness. These documents can also be created at the same time as the legal financial documents for little or no cost depending on whether you seek the help of an attorney.

Do they have long-term-care insurance? Regular health insurance plans do not usually cover the costs of assisted living or nursing homes. If they have purchased long-term-care insurance, you will need the policy number and company for this insurance. If they do not have long-term-care insurance, and they can no longer live on their own, what can they afford for future housing and nursing care costs?

Finding out the answer to these questions will help you to feel less overwhelmed if or when the worst happens. You can also visit these websites for more information: www. agingcare.com (look under the Money and Legal section) and www.usa.gov (look under the senior citizens resources).