Imagine that a perfectly fine, aging-well parent has a minor stroke and is no longer able to manage their financial or legal affairs. What happens, asks the Daily Times, when you are confronted with this scenario in the aptly-titled article “Senior Life: What a nightmare! Untangling a loved one’s finances”? Estate planning attorneys know how stressful of an event this can be if an aging parent has not planned in advance by getting the appropriate legal documents in place.
It looks something like this for the adult children of an aging parent: “Did Mom or Dad have a Will? Where are the bank statements and information about Social Security benefits?” Then, when the child starts making calls, no one will talk with them. They are not legally authorized, even though they are a direct descendant of the person for whom they are calling.
The above scenario happens all the time, and it makes a stressful situation so much more challenging.
Statistically speaking, it is extremely likely that an aging parent will end up, at some point, in a nursing home or a rehabilitation center for an extended period of time. Heck, it happened to both of my parents a couple of years ago. I’m so grateful they had the foresight to meet with an estate planning attorney long before tragedy struck and were able to get the needed documents in place, so that I could use them when needed in order to take care of them with their money. Most people, however, have no idea what their parent’s financial situation is, where and how they keep their financial and legal records, or what they would need to do in an emergency.
It’s not that difficult to fix, but you and your hopefully healthy-ish parent or parents need to start by planning for the future. That means sitting down with an estate planning attorney and making sure to have some key documents drafted up, most importantly, a Power of Attorney, which is an integral part of a basic estate plan.
A Power of Attorney (POA) is a legal document that gives you permission to act on another person’s behalf as their agent, if they are unable to do so themselves due to mental or physical incapacity. It must be properly prepared for your state’s laws. It is best to have an estate planning attorney prepare the document for you, because financial institutions get suspicious of forms that don’t appear highly credible.
The POA will allow you to pay bills and make decisions on behalf of a loved one while they are alive but unable to do so themselves. Without it, you’ll need to go to court to be appointed as legal conservator. That takes a great deal time, is very expensive (so much more than having a POA created and properly executed) and may not even be successful if a person cannot qualify for a bond due to credit or other issues.
Once you have a POA in place, assuming that your parent is able to sign it, then it’s time to get organized when something happens to them and you need to use it. You’ll need to go through all the important papers, setting up a system so you can see what bills need to be paid, how many bank accounts or investment accounts exist and review their financial status.
Next, consider consolidating. If your parent was a child of the Depression, chances are they have money in many different places. This gave them a sense of security and gives you a headache. Consolidate four different checking accounts into one. The same should be done for any CDs, investment accounts and credit cards. Have Social Security and any pension checks deposited into one account.
If you need help, and you might, don’t hesitate to ask for it. The stress of organizing decades of a loved one’s home, plus caring for them and managing the winding down of a life can be overwhelming. Your estate planning attorney will be able to connect you with a number of resources in your area.
Reference: Daily Times (April 9, 2019) “Senior Life: What a nightmare! Untangling a loved one’s finances”