7 Essential Questions To Ask Aging Parents About Their Finances
By Shayla Mars
No one wants to think about the aging of his or her parents, let alone plan for their death. Unfortunately, aging is a part of life, and in order to truly support your parents, it's best to start asking questions now.
According to the National Funeral Directors Association, the average funeral in 2009 (without the glamor of flowers, and etc.) cost $6,560. Fidelity Investments recently estimated that a retiring couple would need about $240,000 to cover medical expenses (not taking into account employee-provided health benefits).
Of course, the most time consuming thoughts are not about the cost themselves, but rather how to afford the cost. As you parents get older here are 7 questions you need to ask.
1. Do you have a will?
Most of us have heard horror stories about families arguing over property left behind from deceased loved ones. Wills are extremely hard to discuss with an elderly parent because it can present the reality of dying.
Although it may be difficult, helping your parents write a will and getting it notarized will save you and other families members tons of stress when it comes to figuring out what happens to an estate, other assets, or money that your parents may leave behind.
2. What's your financial situation?
For some parents, they do not readily share financial information with their children. It is important however to know where your parents bank, what accounts they have open, and how to access these accounts in the event your parents cannot.
It is also important to talk about what debts your parents are leaving behind. According to the Federal Trade Commission, you are not obligated to pay for these debts unless they co-signed a loan or filled a joint-credit card which given the current market climate, is happening more and more frequently. Accessing your parents' current financial situation can help you and them plan for their later years appropriately.
3. What are your retirement benefits?
Health care for seniors can become extremely costly depending on their state of health. It is best to know and understand your parents' benefits and coverage. If your parent has a long-term illness, you should check their insurance policies and medical coverage to insure they will not be excluded in anyway. Be sure to discuss your parents' life insurance policies. You don't have to go into depth about the payout, but be sure to know that it exists and who are the beneficiaries. Beneficiaries could include you and also your parents' siblings and grandchildren.
4. Are you interested in a reverse-mortgage?
Earlier, there was an article written about reverse-mortgages and how people over 62 apply for one in order to bring in extra money. If you parents own their home or have paid a significant amount on their home, then this may be a option. Setting up a reverse-mortgage can help alleviate debt repayment or offset unforeseen medical costs.
5. Are you prepared for assisted living or a retirement home?
This is another difficult question, as no one likes to lose his or her independence. However, as your parents grow older, the idea of assisted care or 24-hour care may become reality. According to a study by ARAG in 2007, 70 percent of people will need long-term care at some point. The Family Care Giver alliance stated that there were 65.7 million unpaid caregivers as of November 2012. An unpaid caregiver is family member, neighbor, or friend that cares for someone. If you do plan on being the caregiver for your parents, there are programs that will pay you to do so.
6. Who is your Power of Attorney?
The Power of Attorney is the person legally able to make decisions on your parents behalf should they become incapacitated. This is an important position to designate, as this person will have control over your parents' finances. Be sure to discuss with your parent who will be the one writing checks and making payments on their behalf if they cannot. Once a Power of Attorney is designated, have it in writing and notary so it is legally binding.
7. Who is your Healthcare Power of Attorney?
This person will be responsible for your medical and life-sustaining decisions if your parents become incapacitated. This could be the most frightening job of all because these decisions will affect your parents over all course of healthcare up to death. Discuss who would be most suitable for this role and who your parents trust, to be able to handle weighty decisions. Ask if they have an advance directive that outlines what to do in the event of life-support or other forms of incapacitation.