There comes a point in our lives where we have to take care of our parents and give a little back to them. One aspect you can help them out with is taking care of their finances. It can get tricky especially if parents don’t want to admit they need help. However, it’s always better to be prepared for unexpected situations.
According to forecasts by WHO, by 2050 there will 2 billion people aged 60 and above which would be one in five people. In fact, between 25 to 30 percent of people aged 85 and above experience cognitive decline. Therefore, with an increasing number of people above 60, parental care needs to be made a priority.
If you aren’t your parents’ power of attorney already, you need to have this important conversation with them and initiate necessary steps. Gaining power of attorney will entitle you to take care of their financial transactions which include signing cheques, legal matters and selling or maintaining any of their assets. Therefore, in times of need you can legally carry out all their financial transactions and manage their bank statements and bill payments.
According to a Forbes article, 22 million people who are 60 and above have legally given someone the right to make financial decisions for them. Have a conversation with your family and come to a unanimous conclusion on a right time to take legal steps.
To understand the process better, check with your lawyer on how to transfer power of attorney as the procedure will take time.
Parents may be reluctant to pass over their power of attorney. There could be many reasons behind it. Top reasons could be, they don’t wish to be a burden on their kids or don’t want to admit they are having trouble with their finances. It is recommended you ease them into the change and don’t take complete control abruptly. For example, start with writing or paying their bills together or perhaps show them how to setup direct payments.
When you first take over their finances gather all the information you need along with any documents. Ask them for their account information, any legal documents, how they pay their bills where they receive their income from. Get to know all the people they deal with when it comes to their finances, this includes financial planners, attorneys, accounts, real estate agents or even tenants.
A big part of gaining all this information to understand their flow of income and how they spend and make money. We want to be aware of their monthly expenses and ensure their life goes on unchanged.
Once you have a good understanding of their finances, think about implementing long-term care for your parents. Check if they have the right health insurance plan and help at home. Compare all health insurance options and select one which is best suits their lifestyle. Have a discussion with them and their financial advisors to see how their savings can be utilized efficiently