2014 / Behavior

Top 10 Steps for Managing Elderly Parents’ Finances

Over the last month I have had two prospects come in who were seeking help to managing their elderly parents financial affairs. It makes me think about when is the right time to start getting involved in ones' parents financial affairs. Are motto is to plan early and plan often. Waiting until it is too late to start preparing for the aging of parents, which is inevitable, is rather unwise. This is because some events that are going to effect your parents could be sudden, and when it happens, it could make handling some simple things like securing a legal authority to act for your dad or mom rather complicated and expensive. Here are top 10 steps that could help you take over your parents’ finances before anything happens:

#1. Secure a durable power of attorney to act on your parents’ behalf and manage their finances

Obtain a durable power of attorney (POA) from your parents when they are still agile and able to authorize it. Once you have a durable POA, you will find it much easier to gain the attention of every financial institutions that keeps your parents’ financial records and access the details you need, like bank account balance, when you need it. Armed with the POA, you can sign checks on behalf of your parents and even handle their accounts indefinitely. The POA is a legal document that entitles you to act on behalf of anyone herein named.

#2. Painstakingly trace out all your parents’ important documents and financial records

You have got to find out wherever your parents keep their money and financial documents. Is it in a bank or somewhere else? What are the bank account details – the account numbers and other specifics? In fact, you have got to act like a financial detective here to track all the details including the keys to safes and you must know where to find any records anytime you need it. You should also obtain details of all online accounts and passwords.

#3. Find out your parent’s annual income and sources

You need to know the actual annual income of your parents. If they earn a monthly pension, know the amount and the source. Track all incomes from investments and every cent they receive either from alimony or for a disability.

#4. Find out their monthly expenses and start paying the bills

Evaluate all the recurring bills including bills paid online. Create a budget and a plan for paying the bills. If there are cases of charged off accounts or bills already overdue, let the creditors know that you are interested in working with them to sort things out. If the bills have piled up so much beyond the ability of your mom or dad to pay, think of getting an attorney involved to address the debt problems using different options.

#5. Investigate the status and eligibility of your parent for government assistance like social security, Medicare and Medicaid

There are instances when people are entitled to government assistance when they become incapacitated. You may never know if your parents can benefit unless you investigate their eligibility and status for such assistance.

#6. Trace the location of your parents’ safe deposit boxes and the keys to the boxes

Your intention for locating your parent’s safe deposit box is to open it and take inventory of the items inside the box. Do this in the presence of a witness.

#7. Get the details of their insurance policies and investigate the status of each policy

Don’t overlook any insurance policy because there could be supplemental benefits hidden in the wordings. Evaluate the policies to see if there is any provisions for long-term care.

#8. Keep records of everything you do when managing parents’ finances

Though your family may be one of the H2est but you certainly won’t want to encourage negative feelings or second-guessing. Therefore, be thorough and document all transactions involving your parents’ finances to head off any suspicion or negative concern.

#9. Think of the need to update your parents’ existing investments to align with the best options

To hedge against inflation, you might want to update your parent’s existing investment with the best options in line with the advice of a skilled financial planner.

#10. Find out if your parents already have an accountant or financial planner but if not, consider hiring one

There are instances where things suddenly happen and a parent develop conditions that requires several years of care. If prior budgeting of an aged parent’s money has not been done before this condition, expensive financial mistakes would have been committed leading to avoidable financial hardship.

It is very important to have a plan because you never know when life is going to take a change for the better or worse. In the case of Becky Hammon, her life just took a huge leap forward!

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