Most people know the importance of planning for the future. They pay their mortgage, save for their children’s college education, and invest in a retirement plan. However, many families are hesitant when it comes to planning for elder care, mostly because the thought of such changes is just too depressing.
A recent Metlife study revealed that caregivers report an average loss of about $550,000 USD in wage wealth due to the unanticipated implications of their caregiving responsibilities. Considering the huge impact that caring for elderly parents can have on family finances, it is important that you have a financial plan. Here is a checklist to help you create a plan for paying for elder care.
- Find out if your parents have established a durable power of attorney.
This is the person who will be trusted to make financial decisions on behalf of your parents in the event that they are unable to do so on their own. Without a power of attorney in place, you will be forced to go to court to get guardianship of your parent before accessing their accounts.
- Locate all your parents’ financial accounts and documents.
This includes financial account information, birth and marriage certificates, living will, health care proxy form, and safe deposit box. This information should be available in your parents’ home record-keeping system. If not, you’ll need to find your parents’ latest tax return.
For all the bank accounts, you will need to identify the institution, address, phone number, account number, contact person, name on account, and names on the signature card. Also find the address of your parents’ safety deposit box, the location of the key, and the person who can sign.
- Find out their sources of income.
Find out what investments your parents have. You will need to find the original documents and the amounts. These may include businesses, real estate, annuities, and stocks, bonds, and mutual funds, among others. You should also find out if your parents receive a monthly pension or funds for a disability, or even alimony.
- Identify your parents’ monthly expenses.
Find out about the tax returns, mortgages, credit card debt, car payments, electric bills, insurance, and any other monthly payments, as well as how they are paid. You should know if there are any automatic deductions being made from any accounts, whether they make payments using paper checks or online banking, and such information.
- Find out what kind of insurance they have.
If one of your parents becomes incapacitated, you should find out if he or she is entitled to any form of government assistance. Also find out if their employer has provided health insurance, or whether health benefits are included in their pension. Your parents may also have purchased a long-term care insurance policy to cover the cost of assisted living, since the standard health insurance plan does not cover nursing home costs. Find out if they have a funeral policy as well.
A final note.
Your parents may not be ready to share most of their financial information with you, but it is important, in order to lessen the burden of elder care. Consider hiring a financial planner to manage their investments, because it will help avoid having other beneficiaries second-guessing your choices later on.
