5 Important Financial Questions to Ask Your Parents

family finance discussionTalking about money is never an easy subject. Discussing it with your partner or your kids is difficult enough, but it can be incredibly uncomfortable to talk about money and estate planning with your parents. As you watch your parents get into their 60s, 70s, or 80s, there are some key questions that you will want to talk about with them to ensure your parents finances are in good shape. Good or bad, you will have to deal with these issues down the road.

1.) Do you have a will?

last will and testamentIf they don’t have one written, then the state they live in will have one for them. My guess is that you don’t want the state to decide how your parent’s assets should be distributed. The will has many features to it, but most importantly it allows for your parent’s to essentially say which personal items go to which children along with an orderly administration of the estate. The size of the estate and other factors will determine if one or multiple trusts may be necessary as well.

 

2.) Do you have a durable power of attorney?

 

power of attorneyIn my mind, the durable power of attorney is one of the most important legal documents for your older parents to have as part of their estate plan. Along with a medical durable power of attorney, someone is going to have to be responsible for making financial and medical decisions should your parents become incapable of making those decisions themselves. Without the durable power of attorney, you will have to go to court to get appointed as your parent’s guardian. Having seen thousands of financial planning cases, this will be the very last thing you will want to do in a time of crisis, should this happen to one of your parents.

3.) Have you chosen a long-term care insurance policy?

medicareI recently had an uncle be put into a nursing home for Alzheimer’s disease. These types of situations are often emotionally traumatic, but many families don’t realize the financial devastation to the estate that they need to take into account as well. Most people don’t choose Medicare as much as it chooses them. Your parents can easily blow through a few hundred thousand dollars in a short period of time with the rising cost of full-time care. It makes practical sense to encourage them to look at long-term care insurance while they can still qualify to get the insurance.

 

4.) Have you recently checked titling of assets and beneficiary designations?

 

insurance policyWith today’s world of marriages, divorces, and remarriages, it is important that your parents review their beneficiary designations on financial documents such as insurance policies and IRA accounts. They should review both primary and contingent beneficiaries every year to be certain that those assets are exactly where they want them to go. It is also a good idea to have discussions about whether you should be a joint signer with them on items such as bank accounts, real estate property, or other investment assets.

 

5.) What happens if...and where is everything?

 

filing cabinetOne of the biggest estate planning problems is that the kids don’t know the location of everything that their parents have ownership over. This doesn’t mean your mom or dad must tell you every account balance or all the details of their will, but simply that they should inform you of where to find any important documents should something unforeseen happen to them. If your parents are traveling in their retirement years all around the US or the globe, this information will be important to know.

 

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