Imagine this scenario: One day, your mother is doing great. She’s operating independently, she’s fully cognizant, and retirement has never looked better. The next day, she has two strokes on the right side of her brain, and now you have to take care of her.
It would be an understatement to call this a stressful situation. On top of the health concerns, if you have been given her power of attorney, it also means you’ll have to manage her finances.
If this is the case, take the following steps:
Get the proper authorization to handle your parents’ finances.
If your parents have given you power of attorney, you can handle their finances. You can now sign their checks with “[parent’s name] with [your name] signing as power of attorney.”
If your parents have not granted power of attorney to anyone, you might have to go to court to become your parents’ guardian. This is an expensive and time-consuming process.
Find all financial accounts and documents.
You should know your parents finances inside and out. You should know if they have a savings and checking account, you should know if they have a safe-deposit box, you should know where they’ve invested.
If your parents have a safe-deposit box, open it and take inventory of what’s inside. Take a witness with you and use a smartphone to record the process of opening and taking inventory of it.
If your parents have a financial advisor, consult them about their investments. That way, you can work with the advisor as your parents’ life goals change. Investments should match your parents’ goals through their entire lives, and the investments will not be working in your parents’ best interest if they aren’t monitored after their illness.
Pay your parents’ bills.
We all know that bills don’t go away if you ignore them. Usually, ignoring them makes them worse.
This depends entirely on your parents’ finances, but you should work to get everything current as soon as possible. If your parents’ financial situation is flush, make sure to pay the bills promptly. If your parents are struggling, prioritize which bills need to be paid now and which ones can wait. The most important element is to get everything current as soon as possible.
Research what benefits are available.
On The National Council on Aging’s site, you’ll find resources for paying for necessities like food, medicine and utilities.
The Administration on Aging’s site lists local services for things like Alzheimer’s disease, transportation and health care for the elderly.
Evaluate your parents’ current plans.
Maybe your parents need a fraction of the life insurance they currently have. Consider reducing their insurance so they don’t have to shell out so much money each month.
Consider transferring assets early.
If your parents have more assets than they need to live on, you might want to consider transferring assets early. Each of your parents are able to gift up to $14,000 a year to each beneficiary without paying the gift tax. This could help you reduce the size of your parent’s estate, and avoid having to deal with estate taxes. It’s important to do this right, so take a look at our article on the subject, and make sure you consult a financial professional before proceeding.
Document everything you do.
Keep copies of every check you write. Maintain bank statements. Take detailed notes. This way, you can show your siblings you’re managing Mom and Dad’s finances properly.
Consult a financial advisor.
Managing finances for your parents is stressful, and it’s difficult to try to handle on your own. A financial advisor can help you manage both their finances and your own while keeping an eye on tax minimization and sound investing decisions.
Make better decisions with your parents’ finances with the help of a professional. Contact McLean today.
McLean Asset Management Corporation (MAMC) is a SEC registered investment adviser. The content of this publication reflects the views of McLean Asset Management Corporation (MAMC) and sources deemed by MAMC to be reliable. There are many different interpretations of investment statistics and many different ideas about how to best use them. Past performance is not indicative of future performance. The information provided is for educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy or sell securities. There are no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information on this presentation. Indexes are not available for direct investment. All investments involve risk.
The information throughout this presentation, whether stock quotes, charts, articles, or any other statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission there of to the user. MAMC only transacts business in states where it is properly registered, or excluded or exempted from registration requirements. It does not provide tax, legal, or accounting advice. The information contained in this presentation does not take into account your particular investment objectives, financial situation, or needs, and you should, in considering this material, discuss your individual circumstances with professionals in those areas before making any decisions.