On his 70th birthday, USAA member Leonard Ratzman didn\u2019t have a will or any kind of estate plan. \u201cI suddenly realized that the worst thing I could do as a father is to pass away and leave my only heir, my daughter, without a list of things to do, people to contact and so forth,\u201d the now-75-year-old recalls.<\/p>\n
He created \u201cThe Turnover\u201d document, a two-inch-plus binder that contains a whopping 60 sections of detailed information to help her manage his estate after his death. While not everyone will go to such lengths, learning what\u2019s in Ratzman\u2019s guide can help you think about information parentscan compile and organize to help their grown children manage their affairs, not just after they die but as they age and require assistance.<\/p>\n
Follow these tips to make managing their affairs easier for them \u2014 and for you.<\/p>\n
ALL IN THE FAMILY<\/p>\n
It may not be easy to ask your parents if they need your assistance with day-to-day fi nances. \u201cMoney is the last bastion of privacy for many people,\u201d says Sharon Burns, co-author of How to Care for Your Parents\u2019 Money While Caring for Your Parents. \u201cThere are all sorts of control and trust issues involved.\u201d<\/p>\n
In the end, helping older parents manage their money may be a necessity and can serve as a gratifying way to give back.\u00a0 Start the money conversation. The death of a fi rst parent or a serious medical condition, such as a broken hip, often spurs the discussion. Stay tuned<\/p>\n
in to signals that you may need to get involved:<\/p>\n
\u25a0 unpaid bills that generate late fees, second notices and utility cutoffs<\/p>\n
\u25a0 noticeable changes in spending habits<\/p>\n
\u25a0 checking account problems, such as bounced checks<\/p>\n
\u25a0 credit card problems, such as late payment charges<\/p>\n
\u25a0 confusion about what bills have been paid or about a particular charge<\/p>\n
If you spot one of these red flags, schedule a frank talk.<\/p>\n
Get the full financial picture.\u00a0If your parents welcome your involvement, ask them to share key legal and fi nancial papers. They should have in place several essential documents, including a will, living will and separate durable Powers of Attorney for health care and fi nancial decision-making. Compile other critical papers, such as deeds, insurance policies, investment accounts, bank accounts, income statements, retirement accounts, all outstanding loan documents and current bills. Decide who should manage your parents\u2019 money. In big families, think about who lives nearby and who has the know-how. One sibling might be a financial whiz, but make sure he\u2019s ready to take on the responsibility. \u201cThis isn\u2019t fun work,\u201d Burns says. \u201cYou\u2019re dealing with not only the fi nancial paperwork, but at times all consuming, emotional handholding.\u201d<\/p>\n
For only children, the burden can seem heavy. Don\u2019t hesitate to get help from your own spouse, a knowledgeable friend or even a professional financial advisor. USAA has CERTIFIED FINANCIAL PLANNER\u2122 practitioners and trust services team members at USAA Federal Savings Bank who can help.<\/p>\n
Understand their budget. Get a handle on monthly income and expenditures and make sure a usable budget is in place. Streamline accounts. Consolidate redundant bank accounts and consider canceling unused credit cards. Next, consider combining current credit card accounts and\u00a0transferring outstanding balances to a lower-interest card.\u00a0 Introduce online banking. If your parents are comfortable transacting business on their computer, online banking with automatic bill pay is probably the easiest way to help with daily finances, particularly from a distance. Arrange for direct deposit for income and set up automatic bill pay from your parents\u2019 checking account. You can also request that dividends and interest payments be reinvested automatically or deposited directly into the checking account.<\/p>\n
If computer use isn\u2019t part of the picture, develop a bill-paying calendar and remind your parents to write the checks, Burns advises. Or, you can suggest taking over the task yourself. Hire a pro. If your parents refuse to let you get involved with their finances, or if managing their money gets too complicated, consider hiring a financial advisor.<\/p>\n
USAA has Certified Financial Planner\u2122\u00a0 practitioners ready to help. If a bill-payer is all that\u2019s required, check out the American Association of Daily Money Managers, at aadmm.com.<\/p>\n
Depending on your parents\u2019 situation, you may also need to hire an elder care attorney to help with estate planning and the health care insurance system. The National Academy of Elder Law Attorneys, at naela.org, can point you to local experts in the field.<\/p>\n
Remember the details.\u00a0Ratzman\u2019s \u201cTurnover\u201d document contains the essentials, including a will, a living will, durable Power of Attorney and a Health Care Power of Attorney. But it goes way beyond the basics, revealing details in a sequential order, beginning with a priority list of contact data for insurance companies and funeral arrangements.<\/p>\n
There\u2019s a list of important passwords; a list of friends and business contacts; and scans of all the active keys he carries for his home, cars and the safe-deposit box. The document provides a list of all credit card numbers, utilities accounts, savings and checking accounts, investment accounts, insurance policy numbers, user IDs and so forth. His daughter will even have instructions on how to care for his hanging plants.<\/p>\n
Ratzman also tips off his daughter to the potential value of some of his possessions, including a vintage Hawaiian shirt that might be a collector\u2019s item. \u201cShe would never know that,\u201d he says. And he supplies the name of a trusted car dealer to call if she wants to sell his \u201972 Corvette.<\/p>\n
Ratzman continually updates the document. \u201cMy daughter was grateful when I told her about it, but didn\u2019t want to know the details,\u201d he says with a laugh. \u201cIt\u2019ll be there when she needs it most, safely stored in a safe-deposit box.\u201d<\/p>\n
Such letters of instruction also can be stored in a fire-proof safe at home. Make sure your loved ones have the code to open it, or that they\u2019re named on a safe-deposit box so they can access it.<\/p>\n
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