They say that an ounce of prevention is worth a pound of cure. For many adult children, it’s hard to contemplate the fact that their once seemingly invincible parents may now—or at some point down the road—become dependent on them to take care of their everyday needs. If you don’t feel prepared to take on these tasks, this scenario can be very stressful—especially when part of your duties involves taking care of your parents’ finances.
Even if you're not at this point with your parents yet, it is important to engage in some basic planning and start preparing in case you do have to take control of their financial affairs later. Follow these tips to help you prepare:
Be proactive—talk to your parents now. If your parents are still mentally and physically fit, now is the time to have a conversation about what they would like to see happen if they eventually need you step in and manage their finances. A critical part of this kind of preparation is to encourage you mom and dad to assemble a document that details the location of their financial accounts and safe-deposit boxes, as well as the names of their financial professionals. They may not be comfortable with you knowing how much money they have, but you need to have access to account numbers, contact information, and names of financial institutions so that you have them in case of an emergency. If you don’t need it right now, make sure this information is kept somewhere secure. As part of this process, ensure that your parents have a will and updated power of attorney forms.
Find out what their financial obligations are. Knowing where your parents stand with bank accounts, their relationships with financial institutions, and their overall assets is only half the story when it comes to being proactive about helping your parents manage their finances. You also need to know what their financial obligations are. Have your parents create a list of all their expenses, so you’ll know what bills need to be paid on a regular basis in case you have to make payments on their behalf. Writing down the specific names of utilities, credit card companies, and the like on this list may seem like a pain, but you’ll be glad you have them if you have to start paying your parents’ bills suddenly—especially if you live far away and aren’t familiar with your parents’ local service providers.
Learn who your parents’ trusted advisors are. In addition to being familiar with the actual transactions of your parents’ financial affairs you should also know which financial professionals they have relationships with. If your parents are still capable of actively managing their finances, but are open to you at least meeting their CPA, investment advisor, and attorney, it may be worthwhile taking advantage of the opportunity to meet them and introduce yourself, in case you need to step in. If your parents aren’t open to the idea of making these introductions, make sure you at least have the information you need to contact your parents’ advisors in the event that you need to act on their behalf.
Having a parent who becomes dependent on you can be a burden that takes its toll on you in many ways. However, with a little bit of advance planning, you should be able to prepare the information you need to manage your parents’ finances effectively, and reducing your stress when it comes to handling the financial piece of their affairs.
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