Managing a parent's finances is a reality many children will face. In fact, about 22 million people age 60 or older have selected someone to make financial decisions on their behalf. Because the shift can happen suddenly, due to illness, an emergency, or a decrease in cognitive abilities – it is best to be as prepared and organized as possible before an emergency occurs. Knowing what to do when the time arises will mitigate stress and help ensure investments are protected.

Here are some tips on how to prepare for managing a parent's finances:

Durable Power of Attorney – A Durable Power of Attorney is a critical document that which gives a designated person or persons the ability to make certain financial and health-related decisions should an individual lose the ability to make these decisions. If a Durable Power of Attorney is not in place at the time when an individual is no longer capable of making decisions, the alternative is to petition the court to set up a guardianship, which is a longer and more involved process.

Location of Financial Records – Have a conversation about where relevant documents and accounts are held. Are things kept at a bank, in a safety deposit box, or even under the mattress?

Financial Institution Information – Learn the names of financial institutions, as well as account information and login credentials. Even with the proper court documentation, it is sometimes hard to acquire account information from banks – so write this information down ahead of time. We recommend checking every six months to make sure nothing has changed.

Monthly Expenses – Make a list of all monthly expenses. Make sure to ask them about their mortgage, insurance, credit card bills, and other household expenses. Also, take note of how bills are paid, whether online, with automatic payment or via snail mail.

Monthly Income – Monthly income may come from pensions, government programs, insurance, disability, or dividends from investments. Knowing when and where money is being deposited helps you better manage the money.