You won't know what kind of shape your parent's finances are in until you ask. Money is always a sticky topic, so come to the discussion prepared to cover the most important issues:
"Do you have a durable power of attorney?"
The durable power of attorney (DPOA) is considered one of the most important personal legal documents for any older adult to have. Along with a healthcare proxy, it will give whomever your parent designates -- whether it be you, one of your siblings, or someone else -- the power to make financial and legal decisions (or, in the case of a healthcare proxy, to make medical decisions) if your parent is incapacitated. Without a durable power of attorney in place, you'll have to go to court to get appointed as your parent's guardian. That's the last thing you'll want to have to think about in a time of crisis, and it's a notoriously complicated and messy legal process. With a durable power of attorney and healthcare proxy in place, you can seamlessly make decisions and access accounts on your parent's behalf without getting the courts involved.
"Have you updated your will, insurance, and retirement account information recently?"
Many people never take another look at their insurance policies or investment account beneficiary designations after they sign the initial papers, but both should be reviewed every year. Beneficiary designations -- who will receive the proceeds from an account if the policy or account holder dies -- can be affected by any change in family circumstance, like the birth of a new child, a death, or a divorce. A yearly financial and insurance review also provides a good moment for your parent to review his asset allocation and evaluate whether he has enough or too much life insurance (if his children are grown and his spouse has other funds on which to live if he dies, for example, your parent could think about cutting back on the amount of life insurance he carries to save money on annual premiums).
glad it did; wish my mom would have
It was a reminder to me that, at 77, I'm not always going to be able to take care of myself. I have a tendency to keep my problems from my children and to 'hide under the covers' about them myself. Thank you very much.
The article made me very aware of the measures I will have to put into place as I contemplate old age.
I've always know where dad's papers are but POA is another issue as we found out when he had a fire this summer, even though I know his insurance agent. We learned he's not allowed to be involved but without a POA they wouldn't send me the insurance claim forms and he didn't understand them or the policy so wouldl take them to his agent; now instead of sending them on to me he didn't seem to understand either how the system actually worked (according to him) so he would give them to the contractor the insurance company (outside of him) had contracted with for fires - against company policy, it turned out , according to the company. They would go out and have him sign the papers without him understanding what he was signing agreeing to give them money they were not entitled to but without my having POA I couldn't do anything about it. It was somewhat of a misunderstanding that we were able to get cleared up but still I had no authority in case I wouldn't have been able to but he doesn't even understand what a POA is or that his agent, who has always been his advisor with his insurance, couldn't in this case. It was a nightmare
Although I knew the answers to 1-4 I really don't know where my mom keeps all of the information. This was a very timely reminder to find out. Thank you.
One caveat with this helpful checklist of items -- our parents may not want to have these discussions. We must be patient...sometimes, VERY PATIENT. If I'm honest with myself, it took me 3 years to get my very private father to open up about his finances. However, he was still undecisive about making arrangements as he thought he'd live 'til 100. It wasn't until a year later when we moved him from his Wisconsin home into our California home that his dementia progressed into moderate Alzheimer's and he was no longer legally capable of making his own decisions. I sought a court supervision via a voluntary conservatorship (due to conflicts with siblings) before managing his health care needs and estate plan.
Found this site by accident. Terrific and helpful articles.