10 Things You Should Know About Your Parent's Finances
What would happen if you had to suddenly take over management of your parent's finances? If a parent or your spouse were to fall ill or become incapacitated, someone has to take over paying bills and managing their money. It happens to many families. Are you prepared?
It's better to have all the information you need before mom or dad can no longer take care of their finances.
Here are the 10 things you should know about your parent's finances:
- 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 parent in order 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 records when you need them. What is the location of keys or codes to lock boxes or safes?
- 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?
- What are your parent's monthly expenses?
Gather information on their mortgage, car payment, credit card debt, electric bill 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, 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?
If your parent becomes incapacitated, you may have to investigate the status and eligibility of government assistance.
- 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?
- 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?
- Do they have an accountant or financial planner?
Who is it and how do you contact them? Have they done any estate planning?