Financial Preparedness

I can't emphasize enough how important it is to take action right away to safeguard your parents assets for them, you, your siblings, all their grandchildren and any charities or causes they want to endow.

My father was a CFO, a smart man and could have ended his life leaving a financial legacy of a few million; instead he ended up on Medicaid. He sandbagged me on his finances for years, then blew it, over time, and I didn't take POA control soon enough. What I learned the hard way could create a different future for your elder, you and your children.

These are the actions I suggest to all my friends, many of whom I've helped with this:

1. Financial Full Disclosure:

Obtain full disclosure on their financial big picture and specific details. This is usually the most challenging piece, often times involving irrational discussions, leading to arguments. One thing that worked for me on one point was to supersede the irrational "stuff" by making a direct appeal to their love for their grandchildren and wanting to provide some sort of financial legacy for them in an increasingly vicious and unstable economic world. However you have to do it, find a way.

2. Full Power of Attorney (POA):

This is essential in the event they fail is such a way where you have to take over quickly. If they've allowed full disclosure in item 1 then this step will likely be a bit easier, but still it becomes a control concern and issue, so trust is at the core of accomplishing this.

3. Become Joint on their Checking Account:

Again, this is critical if you need to take over quickly and manage their finances on the fly.

4. Make Pensions and Social Security Direct Deposit:

Social security and federal pensions do not honor a state based power of attorney. If you are going to take over these payments then you must have your elder declared mentally incompetent. This is rife with extreme difficulties. I've resorted to pretending to be my father to get what I need done. If these are direct deposited and you are joint on their checking account then you can manage their finances without going through the nightmare of declaring them mentally incompetent or even invoking the POA.

5. Revocable Living Trust:

If they have significant assets then you will want to consider setting up a revocable living trust and put all their assets in it, from their checking account, to their property, to their car. This way they are in control while they're alive and mentally competent and then when they pass on, you're in control with no probate court hassle, delays or fees.

6. Roll Over Will:

Again, if they have significant assets then you might want to set up a roll over will so that anything that didn't get placed in the revocable living trust is automatically pulled in. Again, you avoid probate court hassles, delays and fees.

7. Health Care Proxy and a Living Will:

Obviously important so their end of life wishes are understood and honored.

Most of these are relatively simple to carryout, obtaining agreement is the challenge. This is all worth your effort. It can smooth the path for all involved, and allow you to focus on the most important aspect, assisting someone you love through the end stages of their life. Even at the end, there is much to be given and learned. Please read my story at the link called "Myriad Gifts."


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