Managing Aging Parents’ Finances (Part 2)
Image sourced by Christian Lue @christianlue
As we discussed in Part 1 of this series – Managing Aging Parents’ Finances, old age has a way of sneaking up on people. . . when they and their family members least expect it.
Parents and grandparents and people that suffer from early onset of dementia become foggy. First at a slow pace but that typically accelerates.
Our Dad always had horrible handwriting but it got worse over time as his hands began to shake a bit.
While he did have a list of accounts, user names and passwords, his handwriting was illegible.
He was very lucid until he turned 90 – a good run. He was in very good health and even went to the health club four times a week, until he turned 92 when his health started to decline.
At the same time, our Aunt Barbara who’s also 92, has dementia and Alzheimer’s. Nasty stuff.
She used to complete the New York Times Crossword Puzzle through Thursday – no small feat.
Given the rampant cyber crime and cyber hacking, financial institutions and other vendors require passwords and double authentication.
My Dad was no exception when it came to double authentication.
Dad, in his own inimitable way, took double authentication to new heights.
I guess he didn’t really think it through. But when he set up his double authentication, he used the landline telephone number in his office as the backup access instead of his cell phone number.
A bit odd to me that he didn’t use his cell phone number but that’s what he did.
The trouble was that he had vacated his office a year earlier.
And to simplify Dad and my stepmom’s financial lives, cut their expenses and save money, I cancelled Dad’s office landline. Seemed sensible at the time. . .
Somewhere along the way, Microsoft implemented double authentication for Dad’s email service.
Then my brother and I discovered that Dad had used his office landline as the backup access number for his email service. Yikes.
My brother and I spent nearly two hours calling Go Daddy to restore Dad’s email access.
A complete waste of time!!!
There’s a tendency for aging people to resist relinquishing control of their finances! And driving too!
Maybe it’s the loss of control, power and independence or the reality of aging; or perhaps skepticism or distrust. Regardless. . .
Take control! You’ll be doing everyone a favor!
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The secret to success is to get an early start on organizing your aging parents’ financial affairs and personal affairs.
Here’s how:
Make a list of all your aging parents’ household accounts.
Take an inventory of everything. Include both financial accounts and household accounts, for example utilities and service providers.
Utilities typically include electricity, natural gas, heating oil, telephone service, Cable TV services, Wi-Fi, etc.
Service providers typically include trash removal, lawn care, exterminators, snow removal, appliance repair services, etc.
You can identify these vendors by talking with your parents, reviewing their credit card statements and bank statements, reviewing cancelled checks (if they use paper checks) and checking the snail mail so long as they didn’t opt in for paperless billing.
Make a list of all the financial accounts.
Financial accounts include bank accounts, checking accounts, savings accounts, money market accounts, investment accounts, brokerage accounts, retirement accounts, life insurance, disability insurance, annuities and long-term care.
You can identify financial institutions by talking with your parents, their financial advisors, insurance brokers, employers, reviewing their credit card statements and bank statements, reviewing cancelled checks (if they use paper checks) and checking the snail mail so long as they didn’t opt in for paperless billing.
Sometimes, bank account statements may not reveal the whole story, especially when your parents purchased, possibly years ago, an insurance policy and paid a single premium, up-front, upon signing the policy.
You can also identify financial accounts by reviewing your parents’ income tax returns and contacting their accountant (CPA) and financial advisors.
Take control over the mail.
Typically financial institutions send out account statements at least once a year (annually) if not quarterly or monthly.
Take a look in their files, their safe and any safe deposit boxes.
Take note of your parents’ house (personal residence) and any vacation homes.
Do they own their home or do they rent? If they rent, when does the lease expire?
Get a handle on your parents’ investments.
Investments typical include real estate and businesses (direct investments).
Typically, you can identify these investments by checking your parents’ financial statements, income tax returns and valuable papers. You can also contact their financial advisors, insurance brokers and accountant (CPA).
Review the beneficiaries on life insurance policies.
If time has passed since your parents have purchased the life insurance policies, your financial life, family life and personal life may have changed.
Consider whether you want to change the beneficiaries in accordance with your new wishes and intentions.
If you need extra money, you might be able to sell your life insurance policy. Ask your broker or search online.
Make a list of all the financial accounts and their ownership – who’s the owner of each account?
Compare the ownership against your parents’ Last Will and Testament.
Have your parents’ wishes and desires changed? Has your family changed – due to marriage, divorce, grandchildren, death, etc.?
Correct any defects and inconsistencies.
For example, accounts that are owned in joint ownership – where there are two owners – typically the ownership of the account automatically transfers (shifts) to the surviving owner. This is typically called joint ownership with right of survivorship (JTROS). Remember though we are not attorneys so please consult your attorneys, financial institutions and financial advisors.
We have heard of a situation where a husband and his second wife owned a bank account jointly – joint ownership. The husband wanted his children to inherit the money in the bank account. The husband passed away and (as the story goes), the wife gave the money to her children. The husband’s children didn’t inherit any of the money.
Make sure your financial accounts are owned in the way you want so that your money goes to the people and charities that you want to receive it in accordance with your last will and testament. This is called ‘conforming your will’.
By getting a handle on things and starting early, you can save a lot of hassle, money and time too!
Special resources to help you organize your parents’ finances:
Handy Account Password Grid – click here.
Budget and Grow Rich® comprehensive personal budgeting guide – click here.
See you next week.
Arthur V.
Disclaimer: OH and Please Remember, we are Not financial advisors, financial planners, attorneys or accountants and are Not providing any specific financial, tax or legal advice here. Be sure to conduct your own due diligence and consult your own professional advisors to get sound professional advice that’s specific to your financial and personal circumstances, risk tolerance, time horizon and investment goals and objectives among other key factors!
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