5 Most Important Financial Questions to Ask Your Parent
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).