Do your parents have a will? Do you know where it is kept? Are there powers of attorney or advanced health care directives (living wills) in place? Who is named in these documents to make decisions on their behalf?
Talking about finances with your parents is not easy in some families. The topic of money is too personal for some to discuss — even with their adult children. However, having this conversation can save a lot of time and money if you have to step in after something has happened. You need to know a lot more than whether a will exists. What does their health insurance cover? Do they have life insurance? Have they made an inventory of their financial information and important documents?
Bringing in a trusted person to facilitate a family meeting can help start the conversation. Your parent’s lawyer or financial adviser can organize a meeting to give an overview of the estate plan and explain the status of preparations taken to date. This is a good first step to educate adult children on their parent’s financial status and their wishes for handling their estate. The second step is being able to locate all of their financial and legal documents, should they be needed. Many people keep their legal documents in a safe deposit box. This may not be the best place because a safe deposit box often cannot be accessed without a court order. Having a fireproof strongbox in the home may be a better option.
Help your parents create a financial inventory and keep it up-to-date. Vanguard has a handy Personal Financial Inventory (PDF) form you can use to record important financial information. This form, along with other important documents, will need to be kept in a safe place. Many financial advisers scan and store this information for their clients. Aboutone.com is an online family organizer that acts as a digital vault to store this information online.