How would you cope if you suddenly had to take over the management of your parent’s finances? If your parent(s) were to fall ill or become incapacitated, someone has to take over the payment of bills, managing their money, and general well-being.
I have seen it happen many times in my career as a financial planner – in some instances it’s been handled well, in others there have been significant struggles.
So how prepared are you?
Having as much information about your parent’s financial affairs before a significant “life event” happens can make the whole process far easier. Whilst these may be difficult questions to ask of your parent\s, here are some suggestions that can make that process easier:
- Do you have an Enduring Power of Attorney? This document allows you (as the donee) the ability to make financial decisions for and on behalf of the appointor (your parent(s)). Without this document, even something as simple as everyday banking can be made more difficult. I would generally recommend you arrange for a solicitor to draw up this document;
- Have you considered an Advanced Care Directives form? This is a relatively new document that has replaced the Medical Power of Attorney and Enduring Power of Guardianship. It allows the donee to make decisions about health care and accommodation in the event that the appointor can not. Like a Will and Enduring Power of Attorney, I generally recommend this be drawn up under the guidance of a solicitor;
- Where do you bank? and What are your bank account details? Whether your parents 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. If they have keys or codes to locked boxes or safes, the location of these is also important;
- What are your monthly expenses? and How do you pay your bills? Having an understanding of your parent’s utilities providers, regular bill payments (particularly insurances like house/contents/car and medical) and how they are paid can assist you should you have to take over the payment of these in the event of your parent’s incapacity;
- What professional services do you use? Knowing the lawyer that drew up your parent’s estate planning documents, understanding who does their tax return each year and knowing who the financial planner is that looks after their retirement income can be very important. It may be that you will need to liaise with one or more of these in the event of your parent’s incapacity. Try to obtain a business card for each of these professionals so you have it at your fingertips should the need arise;
While this is not an exhaustive list of questions, it provides you with a good conversation starter to have with your parents. Make sure that you keep clear records of the responses that they provide, storing them in a place that you know you can readily access should the need arise.