What would happen if you had to suddenly take over management of your parent’s finances? If your mom or dad were to fall ill or become incapacitated, someone has to continue paying their bills and managing their money. This scenario happens in many families. Are you prepared?
Ideally, an adult child should have all the information they need to handle this task before Mom or Dad can no longer take care of their finances. Ensure you’re ready for this responsibility by having a frank discussion with your parent(s) about their legal preparations and financial commitments.
10 Financial Questions to Ask Your Parent
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) for finances (and medical care). If your parent loses competency without a POA in place, you’ll have to go to court and seek guardianship of them to access accounts on their behalf.
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 important records when you need them. Where are keys or codes to lock boxes or safes located?
What are their bank account numbers and the names of their financial institutions?In addition to knowing where they keep their money, you need specifics on all their accounts. What banks do they use? Who is their mortgage company? Do they use an investment company or work with a broker?
What are your parent’s monthly expenses?Gather information about their mortgage, car payment, credit card debt, utility bills and other expenses.
How do they pay their bills currently?If there are automatic deductions being taken out of a checking account, you need to know about it. Do they use online banking services or only paper checks?
How much is their annual income and where does it come from?Does your parent receive a monthly pension check? Do they have dividends coming in from investments? Do they get money for a disability or alimony?
Do they receive Medicare, Medicaid or Social Security benefits?If your parent becomes incapacitated, you may have to investigate the status and eligibility of their government assistance. Some government programs also require you to obtain additional permissions in order to manage their account(s).
What kind of 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? Do they get health care through the VA? If they have Medicare, how do they get their coverage? Do they have “Original Medicare” or a Medicare Advantage Plan? Do they pay for a Medigap Plan and/or Part D Plan?
Do they have long-term care insurance?A “regular” health insurance plan does not cover the cost of senior living facilities. Did they purchase a long-term care insurance policy to cover the cost of long-term care? If they do not have a policy and can no longer live on their own safely, what can they afford in terms of care and housing?
Do they have an accountant, financial planner or attorney?Who is it and how do you contact them? Have they done any estate planning (e.g., drafting a will, creating a trust)? Do you know where this information is kept?