Protecting Your Parents’ Finances

Now is the time to get a handle on Mom and Dad's money matters. It could make the difference between a comfortable retirement or tarnished golden years.

kids. So it may be difficult for some elders to confront anything that suggests that they need help running their affairs.

How do you begin — and when is a good time to bring up the topic? Richards recommends that you first think about this as a process — and not a one-time event. You’ll have to devise a comprehensive plan of action, which includes rehearsing the actual conversation, thinking about how to handle your emotions and getting prepared for negative remarks.

M. Eileen Dorsey, a certified financial planner in St. Louis, believes that an ideal time to start the dialogue is shortly before Mom’s or Dad’s retirement. Or consider reviewing a parent’s financial health after the death of a spouse. In such cases, Dorsey maintains that the surviving parent wants help "because it always seems like the one that dies first is the one that was managing the finances." But even if both parents are alive well into retirement, it’s never too late to offer assistance.

GETTING PAPERWORK IN ORDER
Begin with small things. For instance, ask parents whether they need you to mail off monthly bills, organize files or keep track of quarterly or annual payments such as property taxes or homeowner’s insurance. As you build a better rapport, ask Mom and Dad to write a list of their assets, liabilities and other pertinent financial information. You should know where to find this information in the event your parents become physically or mentally incapacitated. Explain to them that your intention is not to be nosy but to locate records in case of an emergency. The single best thing you can do is make sure that they have a variety of documents in order — and that you or another designated person can readily access them. Experts recommend that aging parents draw up wills, create a central location for storing paperwork and grant powers of attorney to a trustworthy individual.

One such crucial tool is a durable power of attorney. With an ordinary power of attorney, a parent gives another person permission to handle his or her financial matters. If the parent becomes incapacitated, however, an ordinary power of attorney is voided in certain states. Only a durable power of attorney can provide you with the ability to act. The key, however, is that the transfer papers must be in place before the individual is incapacitated. Why? When a durable is implemented, it includes the right "to make medical as well as business decisions," says Charles T. Smith II, a Washington, D.C., attorney.

Smith isn’t just quoting his law books. He has firsthand experience with its benefits. During his first year of law school, Smith’s mother went to see her legal counsel, drew up a will and created a durable power of attorney authorizing her son to function in her stead if she ever became incapacitated. Ten years later, Smith’s mother suffered a series of strokes. "I was able to carry out financial and

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