Principal Funds

Depending on the age and/or health of your parent(s), the parent/child role reversal may have just begun or may be in full swing. Things that used to be easy — making health care decisions, running errands, taking care of their home, handling finances — become a challenge. Eventually, you realize someone needs to step in and help.

Lending a hand around the house is one thing. Taking over a parent's finances is another matter entirely.

Whether you face this dilemma now or can see it coming, these tips will help you prepare.

Knowing when a parent needs financial help

The process happens so slowly that it may be easy to miss the signs your parent needs help with money.

However, telltale signs that your parent needs help may not have anything to do with money at all. Problems with memory, difficulty keeping the house clean, or subtle personality changes could all be signals their finances are beyond their control.

Starting the conversation

Parents who begin to need help also want to feel in control. That's why it's important to approach the subject of parental finances with care. Ask if there are ways you can help, like balancing the checkbook. That keeps the parent in the driver's seat while giving you a view of their financial situation.

Keep family members informed

Once you realize your parent may need help, get your siblings involved. Keeping siblings in the loop also ensures transparency, minimizes misunderstandings, and helps prevent family squabbles.

Look into legal documents

If your parent hasn't done so already, encourage him or her to set up a durable power of attorney. This authorizes another individual to make health care, business, and financial decisions on the parent's behalf.

An updated will can also dramatically simplify financial matters when he or she passes away.

Discover the details

Ask the following:

Where do they store financial and legal papers? You need to know where to find their will, power of attorney, account statements, Social Security cards, and other key documents.
Do they have a lock box or safe? If so, ask for the location of keys or codes.
Which banks and other financial firms do they use? This includes institutions with which they have credit cards, checking and savings accounts, mutual funds, brokerage accounts, a mortgage, etc.
How do they pay their bills? Do they bank online? Are some expenses deducted from a checking account?
Do they receive benefits from Medicare, Medicaid, and/or Social Security? You may need to look into government assistance status and eligibility if your parent becomes incapacitated.
Do they use a financial planner or accountant? If so, get their contact information.

Getting help

You and your family will probably face several critical questions as you become more involved with your parent's finances. That's when a financial professional can help.

Principal Funds also has several planning resources, as well.
Visit principalfunds.com/parentsandmoney.

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