When we helped a client clean out and sell her mother’s house a couple of years ago, we found a deed to a farm in another state that our client didn’t know about. The property was worth about $500,000. And we can’t count the number of times we’ve found stacks of negotiable savings bonds and stock certificates sitting in desk drawers that beneficiaries didn’t know were there because they weren’t managing their elderly parents’ finances.
But not everything that gets shaken out in the dust of an estate settlement is good news. We’ve also uncovered huge debts that the kids never knew about, and reverse mortgages that stripped all of the equity out of a house.
Having the talk
Older generations can be tight-lipped about their finances, particularly with their children. Unfortunately, more and more adult children are finding themselves in a position of managing elderly parents’ finances. If your parents are still living (and cognitive) now is the time to sit down with them and talk about their finances and any estate plans they’ve set up. If your parents have died or are no longer able to communicate, you’ll need to roll up your sleeves and start digging for this key information.
This can be a very difficult conversation for many families. To make it easier, let your parents know that you respect their choices, but you need this information so that you can help them with their finances if they need it.
What to look for
If your parents are reluctant, or unable, to talk, look for a checkbook. Many seniors still write paper checks to pay bills, so a checkbook register will show how much money is coming in and where it’s going. Then look for statements from banks, brokerage houses and credit card companies. Set up meetings with the branch manager of their bank and/or and their attorney, if they had one. These contacts can at least let you know if there are other places you should be looking.
The six key questions you should be working to answer.
1. Where is their monthly income from, and is it enough to cover their bills?
This information will reveal whether or not your parents are living beyond their means and running up debt. It can also help uncover hidden financial problems. These are the most frequent issues we find in estates:
- Overdue income and property taxes
- Reverse mortgages
- Second mortgages
- Credit card bills
2. Have they given anyone their power of attorney?
And if so, who? This is especially important if you don’t live close to your parents. They need someone who can step in quickly if they get sick or need help, but you need to know it’s someone you can trust, and how to reach them.
3. Do they have an estate plan or a will?
If they do, ask to see it. We often find wills were drawn up 20 or 30 years ago, naming beneficiaries who are either deceased or no longer in the person’s life. Many wills also list assets that are long gone, or neglect to include newer assets.
4. Where do they keep important documents?
Make sure they have everything they need—financial account information, legal documents, insurance policies, deeds—all in one place, and that you know where to find them.
5. Do they have cash, jewelry or anything else of value hidden around the house?
You wouldn’t believe all the hiding places we’ve found money and other valuables stashed!
6. Do they have a safety deposit box?
If that’s where they keep important documents and valuables, ask them to put your name on the account. If they die without giving proper access to someone else, you may need a court order to get into it.
Managing elderly parents’ finances can be fraught with emotional baggage, but getting hit with a financial surprise can be even worse. Try to prevent problems from developing by gathering key information sooner rather than later.
When the time comes for a senior to downsize into a smaller home, the entire process can be overwhelming for everyone involved. The WayForth team guides families through both the emotional and physical elements of a senior relocation. We help at each stage in process: planning, moving, re-settling the new space, and getting the old home ready for sale. Click on the button below to learn more about our senior relocation services.