(If you missed Part 1, read it first to find out how to start the conversation.)
As your parents age, it’s important to talk to them about the details of their financial information so you can take over if you need to.
For instance: Do they have a lockbox? If so, where do they keep the keys? Where do they bank? Who is their accountant?
Locating Information and Legal Authority
If your parents are receptive to sharing this information with you, get as many details as you can. Use this checklist to guide you. Ask about:
- Lockbox location and keys
- Deed or title to their home
- Past tax returns
- Wills and powers of attorney
- Contact information for banks, doctors, accountant, attorney, mortgage company, financial planner and brokerage firm
- Sources of income (for example: a pension, Social Security and IRA withdrawals)
- Medical history, such as drug allergies or other details you might not already know
- Insurance policies
- Social security numbers
- Bank and investment account numbers
- Beneficiary information for their estate
To help your parents manage their money when they are no longer able, you will need a power of attorney. This is a legal document that gives you the power to handle financial transactions, from signing checks to selling a home. But don’t wait until your parent no longer has mental capacity to handle financial transactions. For the document to be valid, your parent must be competent when he or she signs it. Otherwise, you’ll have to go to court and a judge will have to deem your parent incompetent.
Make sure you have a durable power of attorney, which takes effect immediately. A springing power of attorney will not take effect until your parent is deemed incompetent by a doctor, who may be hesitant to sign anything that might lead to a legal dispute.
Don’t Forget the Details
Obtaining a power of attorney alone isn’t enough. Many financial institutions and brokerages have their own forms that must be signed by the account holder before you can gain access. And be sure to give your parents’ financial planner a copy of the power of attorney soon after it is signed. If you wait years to do this, you may have to get your attorney to recertify the document. Send copies of the power of attorney to your parents’ credit card and insurance companies so that you will be able to make transactions on their behalf.
Make sure your parents also have a healthcare decision-making document, such as a healthcare proxy or healthcare directive(also known as a living will or advance directive). This document will give you authority to make medical decisions for them when they can’t. Let your parents’ doctors know you have this document. Your parents might also have to sign a Health Insurance Portability and Accountability Act (HIPAA) release form to give you access to their medical documents.
Next week, we’ll share helpful resources that you can turn to for caring for aging parents.