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Make Financial Arrangements With Your Elderly Parents to Forgo Future Problems

by and on November 27, 2014 3:45 PM

Your mom, who taught you the importance of paying bills on time, doesn't know the date or year anymore, even though she hides her signs of dementia well and remains socially active.

When and how do you step in to keep Mom's finances in order?

The time to get involved in your parents' finances is before it becomes urgent.

If you don't find out things while your parents are still well, it can be a maze to travel through their bills and bank statements when illness strikes or dementia becomes apparent. If your parents have already begun to struggle with normal life processes, you make have to speak up about what you have observed.

Rob Thomas, of Vantage Investment Advisors LLC in State College, offers some suggestions relating to "getting into" a parent's financial situation.

"You should set up a check list of things to take care of," said Thomas. "Some of the items on your check list will involve their money and others will involve their wishes for end-of-life care."

Such a conversation, if your parents are receptive, could start with, "I have been looking at my will and checking up on my retirement accounts. Do you have an up-to-date will that specifies your wishes for your estate? Do you have a living will?"

Seventy percent of seniors have advance directives that spell out end-of-life medical wishes, according to a study by the National Institute on Aging. Try to have your parents take care of that if they haven't already. They can choose whether to allow intubation, CPR and other emergency measures. They also can decide whether they want a feeding tube or the like, or only want "comfort measures."

How do you get a look at your parents' finances, you may wonder. A recent tax return can clue you in to some of your parents' assets if they are amenable to sharing information. In addition, according to Thomas, it would be wise to set up a folder or file containing all important phone numbers, account numbers and passwords for IRAs, pension plans, etc.

The time to set up a power of attorney is while a person is capable of entering into the decision. For a power of attorney to be valid, your parent must be competent when he or she signs it. A recent article in Kiplinger's Retirement Planning 2014 noted that a power of attorney must conform to the laws of the state, or states, where your parents live. The article also points out that if there are siblings, all of them can be given power of attorney and the document can require them to act together. If a person is suddenly incapacitated, it is much more difficult to get access to his or her accounts to pay for care, bills or to maintain a property. If you have the power of attorney, you can go to the bank or other institution and have immediate access to accounts.

Should your parents need to update their wills, they should consider whether the original person named is still the preferred executor. Would someone else be more appropriate at this time? Who are all the beneficiaries — not just of home and bank accounts, but also of IRAs, annuities and pension plans? If there are brokerage accounts, they must be listed. Are there charities that your parents wish to give a percentage or a set amount to? Are there any grandchildren that are to benefit from a life insurance policy or other asset? All these questions can be covered in one visit to a lawyer.

Once satisfied with their wills, your parents should obtain three copies. Attorneys advise clients to give one to their lawyer, one to the person who holds power of attorney, and one for their own records.

Now that you have a grip on your parents' finances, what about the people they depend on? If you live away from your family, you may not know their spiritual adviser, their accountants and others. Include these names and numbers in your folder.

None of this is easy and each situation is different. We all wish that Dad or Mom could sleep away peacefully in their own home, living exactly as they have chosen. Your mother may never lose her faculties and your dad may never require caregivers. But how much better to be prepared if the unthinkable happens? A fall, a sudden stroke or an illness can change a life in the time it takes to write a note reminding yourself , "Check on Mom and Dad's finances."

I've had personal experience with the value of early planning. My mother was having some lapses in memory and I was attempting to help with certain things. She willingly spelled out her wishes for health care and we went to a lawyer where she signed over her house to me and my two sisters. (Of course, she was allowed to remain in it as long as possible.) Shortly after taking that step, an unscrupulous company sold her a new roof — at a very inflated price. I was able to stop the transaction and have the contract declared void because she legally did not own the house.

For peace of mind, plan early. It will save headaches later and you will have the assurance that you have followed your parents' wishes.

This story was produced by the staff at the Centre County Gazette. It was re-published with permission. The Centre County Gazette is a weekly publication, available at many locations around Centre County every Thursday morning.

Connie Cousins covers Centre County for the Gazette.
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