…a multi-part series
Part 2: Durable Power of Attorney and Protecting Your Parent’s Finances
In our first segment of “How to Care for Your Aging Parents without Losing Your Sanity” we looked at planning for the inevitable and the guilt some of us feel when we are forced into the role of caregiver. In this installment we will delve deeper into specific financial information, protecting your parent’s finances and an important document, the Durable Power of Attorney.
Talking to your elderly parents about their finances might pose quite a challenge. The World War II generation likes to guard their independence and financial information. This pride in independence can lead to seniors taking unwise financial measures to avoid asking for help. Kenneth Kamen, president of Mercadien Asset Management in Princeton, N.J., writes of an older woman he knows who racked up $31,000 in credit-card debt before her family found out. This huge debt was the result of household expenses that were beyond her fixed income.
Some of our ageing parents have more money and assets than we ever knew about. This too is important information that needs to be discovered, keeping in mind that with age, the risk of financial abuse increases. It is important to know what assets your parents have and equally important to know where the corresponding documentation for these assets is kept.
How are you supposed to handle you parent’s assets if you are not named on the accounts? Well, that’s where the durable power of attorney comes into play. Let’s take a look at the durable power of attorney, what it is for and some tips for when you have one created.
A durable power of attorney is often chosen as a way to plan for those times when you are incapacitated. It is a written document that remains valid even if the person should later become unable to make their own decisions. With a durable power of attorney, you are able to appoint an agent to manage your financial affairs, make health care decisions, or conduct other business for you during your incapacitation.
A durable power of attorney may be general or limited. A general durable power of attorney may allow your agent to do every act which may legally be done by you. A limited durable power of attorney covers specific events, like selling property, making investments, or making health care decisions. (ATG.SD.gov)
Add a caveat to the durable power of attorney. It is important to add an additional requirement to the durable power of attorney to help in the process of fending off financial elder abuse. It is recommended to add a detailed paragraph that assigns a second person, whether it’s an accountant or personal friend, someone who will take a look at bank statements monthly and do an in-depth analysis of all financial records yearly. Unfortunately the majority of financial elder abuse is committed by a relative — occasionally it’s by the one holding the power of attorney.
OK, so now you have a power of attorney and are able to manage your parent’s finances. The first thing to do is to round up all of the documents pertaining to all of the assets and all of the bills. Below is a list to get you thinking of what you might have to gather up:
- Bank statements and check book
- Credit card statements
- Utility bills
- Actually all monthly bills you can find
- Property and mortgage paperwork, the note, deed, statements and payment information
- Car titles and / or car loan information
- Health insurance information
- Auto insurance information and billing information
- End-of-life paperwork, including a living will, will, that power of attorney you got and any letters spelling out their wishes
- Birth certificate, marriage license or divorce decree
- Passport
- Investment information, including stocks and bonds
- Military records
- At least 3 years of Income tax records
- Retirement plan information
- Credit card statements
- All of your parent’s personal information such as: Full name, date of birth, Social Security Number, phone number and address, names and phone numbers for your parent’s physician, attorney, doctors, and other important people, phone numbers for other family members and your parent’s close friends. You will be surprised how much of their personal information you don’t know.
Now it’s time to go through all of this information and make sure everything is up to date and be sure you know how to contact a representative or where the payments need to go.
While reviewing your parent’s financial information there are a few issues that you should address:
- Do your parents have a will? Is it up-to-date?
- Have you prepared all advanced directives?
- Has your parent prepared proper letters of instruction?
- Does your parent have a living will? Do you know where they stand on a DNR?
- If your parent’s assets will be subject to estate tax, have you spoken with an attorney on how to minimize these expenses?
- Have you discussed funeral arrangement?
While initially difficult, it is important that you talk with your parents and gather all of this information. Making critical decisions for an aging parent is nerve-racking when things going well. You have a big job ahead of you and at times you will wonder if you will ever get through it with your sanity intact, but hang in there and be prepared as possible and you will find you will be able to through the tough times a little easier. Remember that your main objective is to take care of your parents.
In the installment of this continuing series we will look at the difficulties and hopefully some solutions to the most difficult type of caregiving… Long distance caretaking.
