Steps for Managing Mom and Dad’s Finances
Managing Finances: Step 1
Find all of your parents’ financial accounts and documents. If your parents keep their bank and investment files in an easy-to-find place, consider yourself lucky. Otherwise, your best bet is to locate your parents’ most recent tax return. Most of your clues will be on Schedule B, where they listed dividends and interest income and the names of financial institutions. If your parents are still well, encourage them to assemble a file or “financial map” that details the location of their financial accounts and safe-deposit boxes, as well as the names of their financial professionals.
Managing Finances: Step 2
Collect and start paying bills. If you have any concern that Mom and Dad won’t have enough money to pay their bills and medical expenses, cool your jets first. Be sure you have a list of all assets and expenses before you start paying routine bills. You may need to consult an Elder Law attorney or financial planner for help and to prioritize what should be paid and what can wait.
If you don’t have access to your parents’ checking account, consider paying bills yourself and getting reimbursed later. Only do this if you’re absolutely sure your parents have enough money to repay you.
Managing Finances: Step 3
Locate Power of Attorney, Will, Living Will and Trust Documents. Without being named as agent in a power of attorney for your parent or being successor trustee in his or her trust, no one will provide you with any information. More importantly, you will not be able to make medical decisions for mom or dad if necessary (all this even applies to spouses). Remember to keep the original documents in a safe and easily accessible place (usually NOT the safe deposit box at the bank given its limited access). A financial institution may not allow you access without at least seeing the original document so keep it handy.
If your parents do not have these documents, make sure you get to a good Elder Law attorney before they are too cognitively impaired to execute them. If they are too impaired you will need to be appointed their legal guardian which is more expensive and complex.
Managing Finances: Step 4
Open Safe Deposit Boxes: Do this with a witness so there are no disputes as to what is in there.
Managing Finances: Step 5
Keep Good Records: If you are helping mom and dad, keep a paper trail not only for the family members who may question you but for long term care applications and other situations where up to five years of financial information may be necessary.
Managing Finances: Step 6
The List: All bank accounts and numbers, life and health insurance policies and numbers, deeds to all real estate, loan and credit card information, social security numbers and Medicare information, military history and group affiliations, POA, will, trust, instructions for funeral services, prepaid burial and funeral account information.
Managing Finances: Step 7
Bring in an Expert: An Elder Law attorney can help you organize and make sure you understand what long term issues are coming and how to prepare for them. A financial planner can help mom and dad invest what assets they have most productively. A good CPA can help make the best of tax deductions that are available.