Taking Care of Mom and Dad's Money

Robin Miller's mother was a savvy woman when it came to finances. Robin says, "She was the one who would save, would budget, would take care of where the money would go. She would choose that. She would do an excellent job." But with time, Robin started to notice "overdue" notices in the mail. She was concerned enough to help her mother, but was very careful about how she went about it. Dr. Sharon Burns says Robin is one of many children helping parents deal with finances. She has some tips on making it a successful transition.

Parents & Finances

Take note of warning signs
According to Burns, when you see things like late notices, or missed payments, it should trigger some action. Certain life changes may be a catalyst:
>Medical changes
>Death of a spouse
>Aging process

Be delicate
Start the conversation by simply asking if your parents might like some help. Because money is such a private issue, children may be afraid to approach the subject. However, Burns says you need to, for your parents' sake.

Involve other family members
If you have siblings, discuss your concerns with them. Often, the child who lives closest to the parent may be best able to help. Whatever is discussed, keep in mind that the decision should be in the parents' best interest. Burns says this is not a time to allow sibling rivalry to intervene.

Start small
It may help to keep your parents involved in the finances on some level. For example, you might cover day-to-day bills while they follow investments.

Bright Idea!

Burns says even if your parents aren't having problems yet, this would be a good time to sit down and discuss things with them. It makes sense to find out now what bills they have, how they cover them, and how they would like their money spent in the future. Don't forget to seek help from a financial advisor if necessary.

There are some legal issues to take into account when talking with your parents about their wishes for the future.

Your Parents' Finances

Power of Attorney
If you've noticed your mom or dad is having a hard time keeping up with finances, he or she may want to appoint a power of attorney. That's someone your parent can trust to manage money. It's a simple and relatively inexpensive process that can be done with a lawyer or with on-line resources. Your parent must understand what he or she is doing in order to sign the document.

If you are picked as the agent, you need to make several copies of the original document. Keep in mind some banks, insurance companies, and brokers insist that their own forms be used. So, find out which forms you'll need while your parent is still competent enough to sign them.

Gifts
If you want to avoid estate taxes, gifts are one way to alleviate some of the burden. Current law allows annual gifts of $11,000 in either cash or property. Each family member is eligible for a $11,000 gift every year, and the transfer is tax-free.

Ready for Retirement
You should also help make sure your mom or dad retires comfortably. Has your parent set aside enough money to last the rest of his or her life?

Your Parents' Health

While your mom or dad may be capable of making health care decisions now, that may not be the case in the future. So, there's no time better than the present to decide if your parent needs a living will, a health care power of attorney, or an advance directive. What's the difference?

Living Will
A living will allows you to state your wishes about the treatment you would like to receive. For example, would your mom want doctors to put her on a respirator or feed her through a tube if she were permanently unconscious? Health care providers will only follow a living will if the patient is terminally ill or expected to die soon.

Health Care Power of Attorney
A health care power of attorney allows you to designate another person to make health decisions on your behalf. That person can make those decisions if you can't communicate them for yourself… even if you're not terminally ill.

Advance Directive
An advance directive combines the features of a living will and a health care power of attorney.

Private, long-term care insurance is something else you may want to consider. It helps pay for services like assisted living or a nursing home. These services are not covered through your health insurance or Medicare. Medicaid does pay for long-term care. However, you have to use most of your savings or other assets before you can receive Medicaid benefits.

Do you need long-term care insurance?

Long-term care insurance can be expensive.
The price can vary depending on your health and your age. For example, if you purchase a policy before you are 50, it may be cost effective for you. But, if you wait until you're older or become ill, the cost will go up.

You're in it for the long-haul.
Don't forget… you'll be paying the premiums for a number of years. Will you be able to afford the policy if your circumstances change? Or, will you be able to foot the bill if the premiums increase?

Tips before you buy.

Take your time.

Do your homework.
Make sure you know about the product before meeting with a salesperson.

Make sure you're well read.
Insist on reading a copy of the policy contract, not just an outline, before you purchase the plan. Know exactly what the policy covers and what it does not pay for.

Do some investigating.
Check out the financial stability of the company you're considering. A policy is only as good as the company behind it.

Read more smart consumer tips and strategies
from Fox11 Eyewitness News Online

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