Its been 3 weeks since I flew back to Austin and dealt with my parents finances. I'm not a financial planner, nor am I YOUR financial planner, but here are some key lessons learned in sorting out stuff for my parents that might benefit some of you should your parents be in the aging situation
* Not every parent is willing to hand over the reins to their finances like my mom & dad. I cant fix a trust issue or irrationality (if I set this up, I'm going to die tomorrow), but for folks like a MIL who are worried about independence, the most effective tactic I've found is to offer to "help be a second set of eyes" to make sure bills are paid and things like auto registration, insurance, etc are taken care of. Besides uncovering her (lack of) current auto registration, I also found random charges on her CC, stupid things she signed up for "because the other folks in her (retirement) neighborhood had it aka scams like Lifelock", and mistakes made by others (not taking depreciation on her rental property). An hour or so of my effort saved her thousands. The first step is NOT control over the finances but visibility (aka where is the money). That will make what comes after much easier.
* Old people forget passwords and tend to change them a lot. One quick way to stay current is to login to their safari/google/whatever profile on YOUR laptop. This way if they change their password in google chrome, you'll have a current access to it.
* Add your fingerprint to their phone, your phone/email as a 2FA option, and your email address as a recovery address for every account they will let you on: banks and bills being the most important.
* As mentioned above, go through their bank and credit card statements for the last year. Look for odd charges (like rewards program subscriptions), scams like Lifelock, and maintenace/scam programs for plumbing and HVAC. Double check things like newspaper subs, cable, internet, and netflix to make sure they aren't getting scammed here, either.
* Lock down their credit reports. THIS should be the new normal for everyone (not just old people). Only unlock when needed. My mom taught me how to churn CC's for bonuses. That works great... until you cant remember what you had for lunch yesterday.
https://www.experian.com/help/credit-freeze/
https://lockandalert.equifax.com/member-center/portal/
https://service.transunion.com/dss/login.page?PLACE_CTA=TransUnion:PHP:Login
* As they become more willing to secede control, setup a new email address and send all bills/bank statements as e-statements to this new email address. If your mom loves keeping paper (like mine), this is SUPER IMPORTANT.
* If they have assets (aka Real Estate), and especially if they are in California, setup a trust. In some states, going through probate can be cheap (a few hundred $). CA laws are written largely by lawyers so the COURT mandated costs, without a trust, to pass on things like property is CRAZY (starts @ 4% for the first $100K and slides down to 2%). Literally tens of thousands to pass on a $1M home even if you owe $800k because you died the day after closing. How they want to split it up amongst children is up to them, but having something in place will prevent fights in the future.
* Once you have a trust, make sure the beneficiaries are setup. I'm slogging through this now because my parents didn't do this after they executed their trust. Top item is reregistering the real estate with the county tax appraisal office in the name of the trust vs just the parents but its also important that the beneficiaries for various retirement accts is setup correctly as well. Primary should be the surviving spouse and Contingent Beneficiary (aka the backup) is the revocable trust. Every bank has a different form/procedure and this SUCKS.
* Don't forget Required Minimum Distributions (RMDs). After a certain age (72-75 depending on how old you are), the govt requires you to take a certain amount (3%) OUT of every tax deferred acct (so 401Ks and IRAs, not ROTH 401Ks and ROTH IRAs). The penalty is 25% (or 10% if corrected within 2 years). Some financial institutions do this automatically (remind you and set it up for automatic payment). Others not so much. Seeing as how I'm not 70+, I kind of heard this was a thing but it was YET ANOTHER item for me to verify and fix for my parents as not all of their accts had automatic RMDs setup. Sigh.
humaninterest.com
* As they are willing to give up more control, setup durable POA with the various banks/financial instituations so they'll actually talk to you directly. Again, every bank has a different procedure and this SUCKS.
* Try to simplify your parents financial lives: one or two credit cards, one bank acct, one savings acct, one brokerage. All RMDs, other income, and bank stuff should feed into that ONE bank acct. If they want to ladder CDs, they can do so at that one bank even if it means leaving a little money on the table (chasing CD interest rates is part of the reason my mom's finances were such a PITA to sort).
* Automate all payments. Even if they say they did it, check to make sure it was setup correctly (I found this to be necessary for my mom who made mistakes).
* Once you do that, you'll also probably want to get your medical POA filed with the various doctors. I haven't done that yet.
* Find and document the safety deposit boxes. Make sure their rental fees are paid. Find out where the keys are stored.
Final note: its easier to get ahead of these issues now vs waiting until they pass and pick up the pieces. The latter is probably extremely important if there's more than one of you children and NOT everyone is equally responsible/successful. Getting ahead of the issue will prevent future family strife.