Friday, June 1, 2012

10 Money Conversations Most Families Never Have

Questions about long-term care insurance were .... (Photo credit: BrethrenBenefitTrust)The conversations between adult children and their parents concerning money and financial subjects rarely happen. Even thought these conversations are difficult to have they are a necessary part of an estate transition. 

Sadly, these necessary conversations usually are forced to take place when the elder parents are to sick or impaired mentally.
It's important that this has to change and open conversations need to take place when all parties are in good health.

According to a report by the Alzheimer's Association, 5.2 million -- or 1 in 8 Americans -- over the age of 65 have Alzheimer's disease. The same report also cites a study which estimates 13.9% of Americans over age 71 suffer from some form of dementia. If you suddenly had to take over a parents financial affairs would you know where to start.

For the good of all the family you should start as soon as possible to get organized. It will be a benefit to yourself and your parents.

1. Have they named a durable power of attorney to manage their finances?
The first step is to find out if they have named a Durable Power of Attorney (POA). Without a POA in place, you'll have to go to court to get guardianship of your parent in order to access accounts on their behalf.

2. Where do they keep their financial records?
Whether they keep their money and documents in a bank, a safe, or under the mattress, you need to know where to find records when you need them. What is the location of keys or codes to lock boxes or safes?

3. What are their bank account numbers and names of their financial institutions?
In addition to knowing where they keep their money, you need specifics on all account numbers. What banks do they use? Who is their mortgage company? Do they have an investment firm?

4. What are your parent's monthly expenses?
Gather information on their mortgage, car payment, credit card debt, electric bill and other expenses.

5. How do they pay their bills currently?
If there are automatic deductions being taken out of a checking account, you need to know about it. Do they use online banking, or only paper checks?

6. How much is their annual income and where does it come from?
Does your parent receive a monthly pension check? Do they have dividends coming in from investments? Do they get money for a disability, or alimony?

7. Do they receive Medicare, Medicaid, or Social Security?
If your parent becomes incapacitated, you may have to investigate the status and eligibility of government assistance.

8. What kind of medical health insurance do they have in addition to Medicare?
Do they have health insurance provided by an employer? If they are retired, are health benefits included as part of a pension?

9. Do they have long-term care insurance?
A "regular" health insurance plan does not cover the cost of assisted living or a nursing home. Did they purchase a long-term care insurance policy to cover the cost of those residences? If not, and they can no longer live on their own, what can they afford in terms of housing?

10. Do they have an accountant or financial planner?
Who is it and how do you contact them? Have they done any estate planning?

These and many other questions need to be answered before a situation becomes to difficult. Even if many of these things can not be revealed presently, a file or drawer where all of this type of information can be found quickly is a necessity.
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