What do you do when a parent or loved one who has handled the family finances for years is suddenly not capable to continue?
- Close your eyes and hope they pay themselves.
- Throw up your hands and yell “Uncle!”
- Spend a lot of money to pay a professional to figure it out for you.
- Do it yourself.
For the Do-It-Yourselfer, Here are Some Tips
Obtain Proper Authorization.
Only individuals listed on accounts are authorized to obtain information regarding themselves…so either ask your loved one to sign a power of attorney form, or if possible, have another individual who is listed on the accounts (like a spouse) request information with you.
Open the Mail
Sounds simple, but it’s not as simple as it seems. Turn your brain on and think about what you’re opening and why it’s being sent. Get a $10 file at an office supply store and file everything related to bills, insurance and finances. Believe it or not, you’ll probably need to look at some of this information again.
Get Online Access to Bank Accounts
Get access to prior bank statements on checking and savings accounts. Go visit the bank and get online access to view past bank statements and current activity. Whether you take over the bill paying process, or supervise a parent who is new to the bill paying program, online access is a great way to find out what has been paid in the past and what is or isn’t getting paid now.
Follow the Money In
Review the bank statements from the prior year and ascertain where the money is coming from. Look for deposits and transfers in. Are social security or retirement payments coming monthly via automatic transfers in or check deposits? If checks were deposited monthly for most of the year, but not during the past few months, where are those checks? They may be sitting in unopened envelopes or lost somewhere. You may need to call the payer and have the checks reissued.
Follow the Money Out
Who are checks being written to? Does it look like payments were being made in the past few months? You may need to call vendors and find out if payments are current. While you’re at it, is the service still needed? This may be a good time to cancel or put a hold on some services.
Check the Status of Health Insurance
Your parents have insurance cards. Great! Now…are they current on the premiums? If you don’t see a recent invoice showing the insurance has been paid current, call the insurance company and find out if the payments are current, how much they are, when are they due, and how they should be paid. Also, have they been paying for Medicare Part D or a prescription drug insurance plan? Check the mail, payments from the bank accounts, social security statements, etc.
Run a Credit Report
Go to a credit company website like Equifax, Experian, and TransUnion and request a credit report. This report will list all debts reported to the credit company.
Make a Contact List
Make a contact list of names, address, phone numbers, email addresses, account numbers and passwords for all people and places that money comes in from and money goes out to. Also, list how much is owed to or owed from each of these contacts.
Look for Real Estate, Brokerage Accounts, Life Insurance Policies
Have mortgage payments, property taxes and property insurance been paid on real estate you know about? Have they been paid on real estate you don’t know about? Prior year income tax returns will show if investment income was received in the past and where it came from. Keep in mind that investment income or trading which may have occurred in the current year will most likely need to be included in the current year income tax returns. Are there any life insurance policies with cash values, and has money been borrowed on a life insurance policy?
Ready to Yell "Uncle" Now?
You may need to get a professional involved in some of this research, but the more you can do on your own, the better off you’ll be in the long run. Your local Council on Aging may have a resource list of bookkeepers who can help you through this process. Also, if your parents have an income tax professional who regularly prepared their income tax returns, he/she may be able to help steer you in the right direction.
Carolyn is a certified public accountant with over 20 years experience in both public accounting and private industry. She has extensive experience in auditing, fraud detection and finance. She has been an auditor at Deloitte & Touche, a Director and consultant in private industries, and manages her own certified public accounting practice. She is a graduate of California Polytechnic University, San Luis Obispo.
