As your parents start getting older, you might start having concerns over their financial and living situations. Will they be able to pay their bills? What if something happens to them when no one else is there? You want to make sure that your parents are alright. Eventually, you may need to start helping them out. This help might also include handling their finances for them. It can seem like an overwhelming task, especially if the need to manage finances happens suddenly. Here are a few tips on how to handle your aging parents’ finances.
The sooner you start the conversations, the better. This way, there is less confusion later on, when your parents might not be a good position to make decisions for themselves. Having this type of discussion can be awkward for both parties, but it is an important conversation to have. You can also start small. If your parents are getting ready to retire, for instance, ask them how their investments are going or if their mortgage is paid off. It is also important to watch for warning signs that your parents might be having trouble, including unpaid bills, calls from creditors, and unusual and frivolous purchases.
Getting a Power of Attorney
Having a power of attorney is important. If your parents have not already named you as such, this is an important step. You will need this in order to manage finances. A financial institution will not give you account information for your parents without it. Having power of attorney will grant you the authority to act on behalf of your parents in specific financial, legal, and health-related affairs. It can enable you to protect their financial well-being as well as act quickly in the event that they suffer a medical emergency or suffer a steep decline.
With power of attorney, you will have the ability to pay your parents’ bills for them on their behalf. In fact, power of attorney is essential in these instances, since you cannot gain access to accounts without it. The power of attorney will allow you to sign checks on behalf of your parents. If you are going to be paying the bills indefinitely, it will also give you the ability to add yourself to their accounts. This can usually be arranged after the manager of the branch reviews your power of attorney paperwork.
Managing Long-Term Care Costs
As your parents get older, they may start needing help. It is important to find out if they want to stay in their home or if they would prefer to go to an assisted living facility. While many adult children are helping their parents, and even having their parents move in with them, this is not always possible for everyone. There are many types of in-home care services as well as numerous assisted living facilities available these days, providing an alternative to the traditional nursing home. The problem, however, is that Medicare and private insurance often do not provide coverages for these types of services.
Fortunately, this doesn’t mean that your parents, or you, will get stuck with expensive bills for home care or an assisted living community. One of the big things that you should discuss with your parents is what they would prefer to do and how it will be paid for. Long-term care insurance can be a big help here. This type of insurance policy is designed to cover the costs of long-term care, including nursing homes, assisted living communities, in-home care, and even hospice. It is important to buy early, before any health issues arise, to avoid paying higher premiums.
Handling Funeral Costs
One of the most expensive, and most emotionally difficult, things that will eventually have to be dealt with is funeral costs. With the average price of a funeral ranging between $7,000 and $10,000, not being prepared can leave your surviving parent, and you, suffering financially. While it might be an uncomfortable thing to talk about, it is an important discussion to have. If there are no savings to cover the cost of a funeral, a funeral insurance policy can provide great relief in such an emotionally difficult time. Burial insurance is specifically designed to help cover the costs of a funeral, and even any lingering debts, after your parent passes, which can help you to avoid significant financial issues in the future.
Handling finances for your parents might seem like a daunting task, but it is possible. Starting the planning early can help to lessen any confusion and frustration before the need to manage those finances occurs.