Securing Your Parent’s Financial Future

adult_child_with_parent1As your parents age, it’s particularly important for you to help ensure that their assets are protected and their wishes carried out. However, in order to help them in the future, it’s necessary to involve them in the planning now. Here are some positive steps you can take to begin putting everyone’s mind at ease.

As life expectancy continues to rise, so does the likelihood that you will inevitably have to step in at some point and help your parents make financial and other decisions. Consider that as many as 16%-25% of people aged 65 and older have mild cognitive impairment which will understandably have an adverse effect on financial decisions.1 For example, researchers have found that investors with reduced cognitive function take more risk and earn lower returns in the stock market.2

It’s never pleasant to discuss one’s mortality, but putting off a conversation could mean that you are left scrambling to help your parents protect their hard-earned assets. Becoming more aware now will mean that you are clear on making sure that financial and other matters are handled, and in a way that reflects their wishes.

 Experts advise that you should begin while your parents are healthy, so you can introduce the subject slowly and continue the conversation over the years, instead of waiting until they have declined cognitively or an urgent matter arises. The best approach is to reassure them that you are their partner and share a common goal.

 Preparing your parents—and yourself—for the future

Here is an overview of the topics you’ll want to cover. The more open and forthcoming your parents are now, the more it will help when it starts becoming necessary for you to intercede and make decisions on their behalf.

• Do they have enough income and assets to see them through a long retirement? Where are assets held? Perhaps funds should be consolidated. How have their investments performed? Do they have a Financial Advisor and a financial plan?

• What kinds of insurance and coverage do they have? If it isn’t enough, how would they want the shortfall to be paid? How would they fund home healthcare or nursing home expenses? 

• Where do your parents want to live in the future? If they become unable to take care of themselves, do they want to stay in their own home with help from you or a home healthcare worker? Would they prefer to sell the house and move to an assisted living facility? 

• Do they have the necessary legal documents? They’ll need: – A will, which directs the distribution of most of their property upon death. 

– Advanced medical directives that speak for your parents if they become incapacitated: A health care proxy appoints an individual to make medical decisions if they’re unable to communicate, and a living will states their wishes in regard to end-of-life medical treatment.

– Power of attorney, which authorizes someone to make business or legal decisions on their behalf. In your parents’ case, it could be you, a sibling or a tax/legal advisor. 

• Where are all important papers kept? Know where to find their important financial statements, legal documents, tax returns, insurance policies, loan/debt paperwork. Make sure you are listed as a co-renter of a safe-deposit box or you won’t have access if a parent dies.

• What creditors do they pay regularly? Should they be unable to handle paying bills, you’ll need to know who gets paid and when. Talk to your parents about making you a cosignatory on a checking account so you can access checks to pay bills if they’re unable to. See if they’re willing to consider ways to simplify their finances and cut back on the number of credit cards and checks that need to be written by establishing automatic bill-pay with a checking account.

If you’re an investor who shares these concerns and has the desire to create a plan to move forward with more confidence, connect with us today.

– Eddie Link

540-855-3344

[email protected]
10 S. Jefferson St, Suite 1050
Roanoke, VA 24011
http://www.ubs.com/team/meridianwealth

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