The Ultimate Personal Finance Checklist for Anyone with Aging Parents

Photo by Ricardo Moura on Unsplash

And how to avoid descending into family melodrama

Having parents who are aging — well or otherwise — can be a source of stress for those already struggling with managing their financial lives, but who also want to do right by their parents.

But it is, unfortunately, a reality that all of us must contend with. At the same time as we are growing up, our parents are growing old. What we usually focus on (and quite naturally) are our own daily struggles — growing up, taking over all the expenses of our own lives, paying off debt, buying a house/car, progressing in our careers, building a family.

But our parents are struggling too, in their own way. While most of these struggles are physical and mental, they are struggles that can be mitigated quite a bit by simply having some financial ducks in a line.

This simple checklist should help you make the transition from a responsible-adult to an even-more-responsible-adult when it comes to your parents.

1. Start the conversation when it is not needed

It is difficult to imagine our parents needing our help. Weren’t we just babies a few years ago? Well, time flies, and there is no harm in initiating conversations, is there?

There are two reasons why it is important to talk the talk early.

  1. Mental illnesses and disabilities often creep up. You would want all parties to the conversation to be fully cognizant of what is being spoken about.
  2. It might take you some time to fully understand their financial lives. Finances are not just income and expense, they cover a whole gamut of information — insurance, end of life care, assets, wills, and so on.

So, give yourself and your parents enough time so that everyone is on the same page and comfortable with the pace of sharing information. It might also take a bit for your parents to accept that there might come a time when their child is the head of the family, so to speak.

2. Ensure that the following topics are covered

There are endless details that you need to know if ever the time arrives that you become solely responsible for your parents’ finances. But some of them are more important than others, and this list will help you keep a tab on at least the most important ones:

  • A list of all accounts — savings, checking, investment, retirement — and how these are accessed. Are there nominees for each account, and are they updated?
  • A list of all sources of income — from where is the money coming? How often? Into which account? Is there a contract in place and when is it to be renewed? Are there any duties associated with the income? For example, if it is rental income, there may be regular maintenance or payment of property taxes that are the duties associated with the income. What are the expenses associated with each income?
  • A list of all expenses. The details required would be similar to the income questions. Do include details of long-term liabilities like mortgages, and other short-term ones like credit cards.
  • Details of insurances in place. Life, health, disability, and long-term care insurance. What all situations are covered? More importantly, where are the gaps? Are their nominees for the insurances and are they updated? What payments are to be made to maintain each insurance?
  • A list of original documents like birth and marriage certificates, pension and 401(k) documents, property deeds, etc. and their location.
  • Any other assets that are not covered by the accounts — vacation homes, jewelry, safe deposit boxes.
  • A list of their legal compliances. Which compliances do they need doing regularly? Where are the documents related to these? Do they have any professionals who do this for them, in which case, you would need their contacts? The usual suspect is income tax, but there can be others, depending on your parents’ wealth/business.

3. Talk about MLMs and other scams

It is an unfortunate and utterly disgusting reality of humanity — the more vulnerable we are, the more we are targeted for all manners of scams. Our parents are not only financially vulnerable but also socially isolated, which makes their situation ‘the perfect storm’ for MLMers and other scammers of the garden variety.

But do be careful. Instead of talking down to them and ‘explaining’, it makes more sense to talk about how these scams have been around, how some of your friends or even you yourself have been targeted and lost money, and even why they really are scams (yes, it is somehow still a debate even after all the income disclosure statements).

4. Get the legalities in place

Once the conversation starts flowing and your parents are comfortable with sharing things with you, you can broach the topic of getting some legalities in place. These documents will help you gain access and take decisions on their behalf, in case something untoward does happen without going to court.

I’m not providing legal advice here (and you shouldn’t take legal advice from blogs) because I value not being sued, but some of the routes these things are usually set up are:

  • Durable Power of Attorney — It gives you the power to access your parent’s financial assets and pay off their liabilities like bills or caregiver expenses
  • Power of Attorney for Health — It empowers you to take medical decisions on your parent’s behalf if such a situation arises
  • Trust — the assets are transferred to a trust of which you are the trustee, bound by fiduciary duty to use the assets for their well-being

Also, if your parents are already money-savvy, they might already have some of these legalities in place. In that case, go through the documents and have them updated to reflect their current desires.

5. Start getting involved

The proof of the pudding is in the eating. Till now, all steps have been only ‘talk’ — now it is time to walk the talk.

This could also be the most sensitive step, since it requires your parents to relinquish control. It is up to you to be considerate and sympathetic to their desires and not over-step their boundaries.

The easiest way to begin getting involved, is to simplify things for them,which will eventually lead them to be simplified for you as well. For example,

  • If they have any income which has to be manually deposited, switch them over to direct deposit.
  • If they pay expenses by writing cheques or transferring money, set up autopay for all recurring bills.
  • Set up an income and payment schedule for the entire year. This will help fill any gaps in your own understanding of all their income and expense streams, as well as have a fallback option in case your parents start to miss out on remembering each payment.
  • Do NOT mix your own finances. That is a slippery slope down into misunderstandings and resentment.
  • If you have siblings/other close relatives, keep them informed.

Although a delicate transition, it doesn’t have to be one with hurt feelings and tears, as long as you treat your parents with kid gloves, pun absolutely intended.

Wanna learn more practical finance? Join my 10-day Personal Finance Crash Course absolutely free here.

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· Budget without tracking every penny

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