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:
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"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.
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"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).
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"Do you have plans or insurance in place to pay for long-term care if it's needed?"
Even if your parent is in good health today, he'll likely need some type of long-term care eventually -- and the costs are staggering. A year in a nursing home costs more than $50,000 on average, and much more in some states. Usually, neither health insurance nor Medicare cover any of these expenses, so your parent should have some type of plan in place to pay for such care should it be needed. Long-term care insurance is a good option and can be added to existing life insurance policies, possibly at a discounted rate. Medicaid also covers some nursing home costs, but your parent should consult an elder-law attorney now to find out if he qualifies for Medicaid. If not, the attorney may advise spending down assets – literally, the process of spending money without gifting or transferring assets until your parent meets the strict income requirements necessary to qualify for Medicaid. Without a plan in place to pay for long-term care, you and your siblings will be on the hook to pick up the cost unless your parent has very deep pockets.
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"Who's advising you?"
Although most adults are fiercely private about their finances and want to maintain their independence, it's important in case of an emergency that you know how to contact your parent's attorney, financial advisor, accountant, and insurance agent. At the same time, as your parent ages, you can keep an eye on whether his financial and legal advisers are scrupulous, objective, and well-versed in elder financial issues, with no vested interest in selling specific products. Getting the details on exactly who is advising your parent is a good way to protect him from scams as well as to ensure that he has funds in case of an emergency.
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"Where is all this stuff?"
If your parent has a stroke or heart attack, the last thing you're going to want to worry about is what his Social Security number is, what health insurance he has, or whether the mortgage has been paid. That's why it's important to sit down with him before a crisis hits and find out what kind of bill-paying system he has in place, what insurance he has, and where all his important papers are located. Although some may balk at sharing this kind of personal information, reassure him that you don't have to see any of his private papers now -- you just need to know where they are to ensure his financial well-being in the event that he's not able to take care of it himself.
I think my aunt may have POA over my gma and all she is worried about it insurance money. She doesnt notify us of anything when she goes into the hospital or doctors appts or anything. How can I find out who has POA over her, if anybody? And how can it be taken away if I feel she is harming my gma with neglect?
All information is concise without having to read through endless details. Basic documents and their locations (power of attorney, wills), insurance and retirement plans in place for later, updating beneficiaries, advisors.
We had to start from scratch with my father. It took my husband and me longer to make sense of his paperwork and to follow-up on his notes than it did to care for him. He was just too private about his matters and thought he'd live 'til 100. Great questions--simple, to the point, and easy to implement in a non-intrusive way with parents who want to remain in control (but are having a more difficult time with judgment). Learning where they keep records (miraculous, if all of it is in one place!) is a good start.
It's a good checklist to work with over a period of time rather than a firestorm of potentially imposing questions in a crisis. It also breaks down bigger issues into smaller individual conversations.
I like this site. Seems very helpful!
I just noticed the comment from anonymous about the parent who won't answer and will give some brief advice. #1: explain why you want to know, what your concerns are, the potential burden and difficulties that could be encountered, sometimes a story or how you have recently done these things yourself will help. #2 ask your parent to at least let you know where info. can be located/who to contact should there be a problem--if they don't want you knowing details of finances, etc. ask that they at least provide that in case something happens (of course, continue to address this...as that doesn't answer issues like planning, what they would want, how they'll pay for care, etc.). Here is a related article: http://www.forbes.com/2007/07/25/geriatrics-medicare-medicaid-pf-retire-in_sm_0725retirement_inl.html and two great books I'd recommend are How to Say it To Seniors by David Solie and Another Country: Navigating the Emotional Terrain of Our Elders by Pipher.
Great list! I'll also share a list of key information/docs that is provided by the Foreign Service Worker Family Liaison Office and is a great checklist for family caregivers/adult children: http://www.agingwisely.com/document-locator-list/. These are some of they key items you'll need if someone becomes ill or at death. Along with the legal docs such as DPOA, healthcare proxy and living will. We really all need to get proactive on this stuff...accidents and illness happen at all ages.
A good wake up call,this list with the answers wii go to our kids. THIS IS A EXCELLENT WEB SITE.
Great, and important list! My dad was so prepared, he had most of these answered and written down before he was 60. Hope I can do as well.
I think that these steps are invaluable but I have a parent who refuses to answer the questions.. then what?