As your parents age and their cognitive health declines or they begin experiencing trouble with their memory, you may notice them having difficulty continuing to manage their finances.
It is most likely time to step in and help if you notice any of the following:
- Unpaid bills and bounced checks
- Calls from creditors
- Making frivolous purchases or spending unusually large amounts of money
- Forgetting to file yearly taxes
- Misplacing important financial documents, credit cards, checkbooks, and even cash
- Making inappropriate investments
Furthermore, if mom or dad has been through a recent significant life change or is having trouble in other areas of life, chances are their ability to manage finances will suffer. These include:
- The recent death of a spouse or very close loved one
- Physical illness, mental health issues, or severe memory impairment
- Difficulty performing routine daily activities like bathing, eating, and taking medication
It is best to have financial conversations with mom and dad before severe cognitive decline sets in or tragedy strikes, such as a disabling illness or a sudden passing. Experts recommend following the 40-70 rule. If they are around age seventy and you are around age forty, now is the time to sit down with them and discuss finances, as well as end-of-life planning. It is critical to begin with an open and honest conversation that gives you all the information you need to be prepared to take over whenever necessary. Be sure to gather the following information from mom and dad:
- The location of relevant financial documents and any passwords or codes needed to access them.
- The names and contact information for their banks, mortgage company, financial planner, or investment firms. Be sure to also ask about where to find their bank account numbers. It may also be worthwhile to have them add you as an authorized user or joint account holder on their accounts.
- All monthly expenses, including utilities, the mortgage, car payments, and insurance, as well as any outstanding debt that they may have.
- Whether they’ve named you as a durable power of attorney, giving you the authority to make financial decisions on their behalf if they are unable to do so.
- Any additional subsidies that they may be receiving. Whether they are receiving Medicare, Medicaid, Social Security, or a combination of all three, it’s important to know their status if they were to become incapacitated and possibly be eligible for further government assistance.
If you’re having difficulty approaching this topic with mom or dad or feel as though they haven’t been receptive to your attempts at talking, consider asking a financial advisor, attorney, or family friend to step in and help out. Regardless of how you broach the topic, it’s critical to have these discussions before mom or dad’s health declines to avoid future financial trouble. In the long run, you’ll be happy that you did.