5 Most Important Financial Questions to Ask Your Parent

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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).

More Questions to Ask About Your Parent's Finances

"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.

"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.

"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.

Stephanie Miles

Stephanie Miles is a former business journalist for the online Wall Street Journal and CNET Networks, who focuses on consumer issues including finance and personal technology as well as consumer marketing and advertising. See full bio

over 5 years, said...

With his hospital stay I was finally able to get POA; I just hope it would stand up if contested since it wasn't actually done until after they got his admitting doctor (who's not his regular doctor and decided he didn't want to discharge follow-up but transferred him instead back to his PCP) to write a letter basically saying he was imcompetent

over 5 years, said...

good article-wish my sibling would be open minded enough to read & see these issues are senior issues not our parents mishandle their $. Even though Dad"s on hospice he still won't discuss his finances; as he's behind on bills & won't turn over bill paying to anyone else. These articles help in this process- thanks.

over 6 years, said...

glad it did; wish my mom would have

over 6 years, said...

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.

over 6 years, said...

The article made me very aware of the measures I will have to put into place as I contemplate old age.

over 6 years, said...

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

over 6 years, said...

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.

over 6 years, said...

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.

over 6 years, said...

Found this site by accident. Terrific and helpful articles.