Financial DOs and DON’Ts (part 1)

When our parents get to the age where they need help with their financial matters, we need to proceed with caution. There are some things that seem to make sense on the surface, but end up causing bigger, costlier problems in the future. Therefore, I’ve put together a list of some of the most common DOs and DON’Ts. In this article I’ll cover the Dos, and next month I’ll write about the DON’Ts.

First on the DO list is to help your parents protect their identity. This can be done by helping them check their free credit reports (www.AnnualCreditReport.com) to look for signs of identity theft. After that they can place a credit freeze on credit bureau records by going to each of the three credit bureau websites (Experian, Equifax and TransUnion). A credit freeze can prevent a thief from opening credit accounts in their name. See the October 10, 2012 blog posting, Protecting the Identity of Seniors for more details.

Next, help your parents consolidate their bank and investment accounts. Close bank accounts that aren’t needed and select one bank for the banking relationship. Generally, investments can be consolidated at one firm. Individual stock certificates can be deposited in a brokerage account to make tracking splits and spin-offs easier. Your parents’ financial planner should be able to help with this process, although make sure you are aware if changes will result in new commissions or fees.

Finally, help your parents review the beneficiary designations on all life insurance, retirement accounts, annuities and pensions to verify they coordinate with their estate plan. Estate planning attorneys will usually provide the appropriate beneficiary designations, but quite often accounts or policies don’t get updated or new accounts get a designation that bypasses the estate plan. When in doubt, contact the estate planning attorney.

Accomplishing these three items will go a long way toward making sure your parents have their financial ducks in a row.

Juli Erhart-Graves is a CERTIFIED FINANCIAL PLANNER™ practitioner with Worley Erhart-Graves Financial Advisors, Inc. Worley Erhart-Graves Financial Advisors, Inc. is a Registered Investment Advisor. Registration as an investment advisor does not constitute an endorsement of the firm by securities regulators nor does it indicate that the advisor has attained a particular level of skill or ability. Content is for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.