Should I Ask Mom and Dad about Their Finances?

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There are now more than 70 million Baby Boomers in the U.S. However, millions of adult children may not be prepared to make important decisions about their parents’ future if necessary, because of a lack of knowledge about their parents’ finances.

Adult children should know about their parents’ finances in case of any emergency. They should also know critical information in case of death. NASDAQ’s recent article entitled “9 Questions to Ask Aging Parents About Their Finances” acknowledges that speaking to aging parents about their finances isn’t easy. However, to start this process, the article gives us nine essential topics you may want to discuss with your parents:

Do You Have a Financial Plan (and is it enough)? See if your parents have a financial plan. Some parents will have a solid financial plan to let them live comfortably into their 80s or 90s. On the other hand, you may discover they live on a fixed budget and money is tight. If you see that you’ll need to help them financially now or in the future, start planning ASAP. Any decision to provide them with financial support will likely affect your financial plan.

Do You Have an Accessible List of All Your Accounts? Ask your parents to draft a list of their financial assets and those named as beneficiaries of those accounts and keep it in a safe place. They should also put together contacts, such as clergy, CPA, estate planning attorney, physician, etc.

Where’s Your Will, and Who’s the Executor? See where your parents keep their wills and estate documents. Some estate planning attorneys retain an original copy. If your parents don’t have a will, encourage them to see an estate attorney. An item that’s not commonly listed in the will, that you may want to ask about is if your parents have prepaid for a burial plot or memorial arrangements.

Do You Have Life Insurance Policies that I Should Know About? See if your parents have any active life insurance policies. Get the details of the policies and the policy numbers. If your parents are still working, they may also have life insurance through an employer.

Are There Any Special Bequests to Family and Friends? Family heirlooms and particular personal property may be a part of your parent’s estate plan. A sibling may have claimed your dad’s coin collection. Knowing your parents’ intentions and wishes for their keepsakes will make things much easier when they pass. Moreover, having conversations about family heirlooms now can help prevent any hard feelings later. Some people make up a list for their bequests and reference it in their wills.

Who Have You Named as Your Financial Power of Attorney? This document lets your parents name a primary and secondary person to make financial decisions on their behalf if they become incapacitated. If you’re the one designated to make financial decisions, find out where all of your parents’ financial assets are held. You should also get information about their Medicare policy, any pensions, and their Social Security benefits. It even helps to know their utility companies if you need to pay these bills and must prove power of attorney.

Do You Have a Living Will? They should each have an advance health care directive or living will and health care power of attorney. (Different names for the same document.) These documents designate who has authority to make medical decisions on their behalf if they become incapacitated or terminally ill. The Advanced Directive should include your parents’ preferences for life-sustaining treatment, including a “Do Not Resuscitate”, as well as preferences on organ donation.

Do You Have Trouble Balancing Your Checkbook Lately or Forgotten to Pay Bills? Discuss key financial decisions with your parents while they are in good health. This will let you make a plan if they show signs of memory loss. The symptoms of memory loss include forgetting appointments, making occasional errors while managing household finances, or getting confused about the day of the week.

Do You Have a Long-Term Care Policy? To make claim for long-term care insurance benefits, a person typically needs to be unable to perform two out of six everyday “activities of daily living” (bathing, dressing, toileting, eating, transferring, and continence) or have a severe cognitive disorder. If your parents have a policy, access it and review its core benefits if you need to help them file a claim.

Discussing your parents’ financial and estate plans isn’t fun, but it will help give both you and your parents some peace of mind to know that they will be provided for and things will be taken care of in their absence.

Reference: NASDAQ (Aug. 27, 2021) “9 Questions to Ask Aging Parents About Their Finances”