It is normal to worry about your parents’ health as they get older. You might also wonder about handling finances if a parent becomes incapacitated. Could you access their accounts to pay for care? How would you determine who makes financial decisions? These challenges are more difficult if a plan isn’t already in place. This post explores some steps families should take to ensure a smooth financial transition.
Essential Planning for When a Parent Becomes Incapacitated
Establish a Durable Power of Attorney
Having your parents assign someone with power of attorney is smart financial preparation. However, it must be a durable POA, ensuring the powers remain active even if doctors determine incapacity. A durable POS ensures a seamless transition for their financial affairs and other matters. The POA can cover tasks like paying bills, handling investments, managing real estate, and applying for benefits.
Consider a Revocable Living Trust
With a revocable living trust, your parents can manage their finances while still capable. The trust can have a successor trustee who can handle affairs in the event of incapacity. The trustee manages all assets in the trust and handles tasks like paying for care. Having a trust can also allow for this level of financial management without needing a court ruling.
Assign a Healthcare Surrogate
Healthcare surrogacy allows your parent to assign someone to make medical decisions on their behalf. While it is not a matter of finances, it can ensure your parents’ medical wishes if they can’t make decisions. It can also reduce conflict and make decisions easier during a difficult time. The healthcare surrogacy can also let the person with financial powers know who to coordinate with concerning medical decisions.
Inventory Your Parents’ Assets
Work with your parents to perform a complete inventory of all their assets. Families should list bank accounts, investment accounts, retirement funds, and real estate. Include all contact information and account numbers. If there are online accounts, organize all log-in information. Tracking liabilities, like mortgages, loans, and credit card balances, is also essential. Whoever has financial power will need to maintain debt payments.
Review Insurance Policies
Reviewing and assessing your parents’ insurance policies is also important. You should compile a list of policies covering life insurance, health coverage, long-term care policies, and homeowners insurance. Review details like the scope, costs, and benefits of each policy. Assess your parents’ needs and consider whether there may be gaps. If coverage is insufficient, consider additional policies.
Gather Important Documents
Gathering and organizing important documents can also ensure a smooth transition during incapacity. Families should compile wills, tax records, property deeds, insurance policies, and financial records. Store these documents in a secure yet accessible location. Having these documents available can avoid delays when access is necessary.
The most crucial point is to start planning early. It is also essential to ensure open communication among family members. Keeping everyone informed will prevent conflict and ensure a smooth transition.
Do your parents need help with incapacity planning? The experts from the Scott Law Offices can walk you through the process and explain your options. Reach out now to learn more!
