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Helping Families Organize Financial Affairs

by Jay D. Eich, CFP®, CPA

One of our favorite compliments is when clients tell us we have helped the family finally get their affairs in order. No matter your age, organizing financial affairs is a tedious and difficult process. Trust Company can assist by pointing out some of the most important steps to take and guide you along the path of successfully completing this process.

The crucial first step in organizing financial affairs is not only sharing the details of the family’s assets, but also sharing the location of all financial records. This may require sifting through file cabinets, safe deposit boxes, storage units, and email accounts. Sometimes a parent has opened a bank account online and paper statements are not being mailed. Identifying all assets, their location, and their value is paramount in the organization process.

Next, identify the exact location of all original estate planning documents and insurance policies. We, along with your estate planning attorney and insurance professional, can help review these documents to ensure they reflect your parents’ current wishes and minimize their estate tax. If your parents’ goal is to have you assist with their financial affairs, be sure to work with an experienced estate planning attorney who can draft a Durable Financial Power of Attorney. This document will give the designated attorney(s)-in-fact the legal authority to engage in financial transactions on behalf of the parent. It is a good idea to have several copies of the executed Power of Attorney made as each bank, financial institution, insurance company, or medical facility may require a copy. Some institutions require their own in-house form. During this process it is a good idea to talk with each institution and determine exactly which form each institution requires before the need to use a Power of Attorney arises.

Remember, getting your parents’ financial affairs in order requires both patience and perseverance as you and your parents work with their banks, credit card companies, and other institutions. Many issues are difficult to tackle, and some will require discussions with siblings or other family members. For example, have your parents thought about who will pay the bills if Mom is suddenly incapacitated? Will housing need to change if health issues impair Dad’s mobility? What happens if one or both of your parents can no longer drive? We know these are scary questions as many of us have already gone through this with our own families. Having these discussions early on, becoming prepared, and having a clear understanding of your parents’ wishes will help eliminate some of the stress and tension that can arise as parents age and family dynamics change.

Once all the assets have been identified and the original documents have been located, it is important to verify that all bank, investment, retirement, and insurance accounts are properly titled so that they reflect your parents’ current wishes and minimize their estate tax. It is important to review all forms of insurance, particularly health and long-term care policies, at least every few years. Don’t forget that digital logins and passwords are just as important as health and financial information and should be kept in a secure, confidential location and the record updated at least annually.

While the above touched on some of the major tasks to tackle when beginning to organize your family’s financial affairs, there are a plethora of issues to still be considered. For some this article may have generated more questions than answers, but we hope it will encourage a healthy dialogue within your family. Think of this as a starting point. It’s important for adult children to be familiar with their parents’ financial affairs and their advisor team. That team could include an accountant, insurance professional, estate planning attorney, and wealth advisor. Engaging with your parents in discussions about their financial affairs benefits the entire family. Getting to know and spending time with their advisor team enables you to understand exactly what your parents want and how the team can assist your family in the years to come.

For more detailed information, please be sure to ask us about our “Guidebook for Your Family” and other resources we use to help you through this process.

Jay is a Certified Public Accountant and a CERTIFIED FINANCIAL PLANNER™. He joined Trust Company in 2008 after more than eleven years with PricewaterhouseCoopers, LLP where he was a Director in the Personal Financial Group. He is a Wealth Advisor in Charlotte, responsible for working directly with our clients to provide integrated wealth management solutions.