By Carol Church
In part 1 of this series, we talked about the important reasons why adult children need to talk about money and finances with aging parents. In this follow-up, we’ll get more specific as to how to make this conversation a little easier, as well as what to discuss.
Experts suggest having this conversation on parents’ “home turf” at a time that is relaxed and neutral. This means avoiding big occasions like holidays, if possible. It may also be better to have a series of short talks rather than one long discussion. Children probably want to bring up the topic in advance so parents don’t feel blindsided and have a little time to prepare, talk amongst themselves, and locate documents.
Consider who should be included. Would spouses of adult children be a good addition, or not? On the one hand, they may be seen as intruders, but on the other, their presence may motivate people to be polite.
If parents are resistant, it may help to say that this topic is concerning you and that having the conversation will help you and allow you not to worry. Most mothers and fathers want their children to feel happy and will be at least somewhat open to this.
Topics to Cover:
Talk about how to know where the information is
There are many important documents whose location someone will eventually need to know. While it is not necessary for adult children to see and view all these items ahead of time, they at least need to know where to find a letter of instructions that explains where this information is. These essential papers and details include, but are not limited to:
- Marriage licenses, divorce papers, birth and death certificates
- Insurance policies (health, life, and property)
- Social security cards and documents
- Bank account numbers and details
- Investment and retirement account numbers and details
- House deed and mortgage information
- Funeral and burial wishes, including details such as burial plot purchases
- Electronic account details, such as a list of important passwords and sites frequently used
- Military records and discharge papers
- Credit card account information, as well as account information for other recurring bills and accounts
Make sure essential plans have been made
The best-case scenario is for older adults to have all of the following in place. By the way, this applies to adult children, too. It may strengthen your case if you can tell them you have your own “house” in order.
Dying without a will leads to many complications for family members and can tie up assets for a long period during the probate process. Dying intestate (with no will) also means one cannot make any specifications as to what is done with money and belongings; the court makes these decisions based on the laws of your state.
A health care proxy
A healthcare proxy is a legal document designating someone to make healthcare decisions for a person who is not able to make decisions for her or himself. While these decisions may include deciding when to end life support, they also cover other choices about health care, such as where the person will receive care, what procedures he or she will have, and so on.
A durable power of attorney for finances
Similar to a healthcare proxy, but for finances, this legal document names someone who can access the money and financial information of a person who is not competent to do so him or herself. If a POA has not been appointed and someone is no longer competent, a court will have to appoint someone to take on this task.
A generalized estate plan
Though many families may think their assets are too few to require any assistance, experts advise that most people will benefit from creating a formal estate plan with the assistance of a financial planner. In some cases, a lawyer’s help will also be needed. Various DIY and online options also exist, but they may or may not be adequate or customized to your state.
Talk more broadly about the financial situation
It’s often important to ensure that parents have enough money to get by and are not in danger of outliving their assets, even if major medical costs come their way. What will happen if they need daily in-home care? What if they need to move to a community that offers more services? Do they have long-term care insurance or sufficient assets to pay for this, or might it be necessary for them to move in with children, sell the house (or get a reverse mortgage) or get financial help from family? How do they feel about the various living options?
On the flip side, if there are substantial assets, or if family has the belief that there are, it may be crucial to explain now what the situation is. For instance, perhaps trusts have been set up, a large charitable donation will be made, or a business will be split up or dissolved. Those with large estates may want to discuss strategies to avoid tax burden at the end of life.
Another topic to discuss, if needed: how are they coping with organizing bills and papers and managing their financial needs? For some people, this is difficult at the best of times. For others, it has become overwhelming with age or poor health. They might welcome some assistance.
Talk more generally about end of life
This is not a “money” topic, but usually ends up intertwined with these concerns due to the likelihood that those addressing a will and other estate issues will also consider end of life wishes. Encourage parents to talk about what they want as far as healthcare measures and to make those wishes known via a living will or advance directive. One easy place to get started is Five Wishes.
Again, these conversations may not be easy. The subject is tempting to want to avoid, and no time may feel like the right time to bring it up. But talking about these issues now will make matters much easier later on. The resources below may help.
A Place for Mom: Financial Discussions
Fowler, K. (2016). Caring for Elderly Parents’ Estate and Finances. Retrieved from http://www.aplaceformom.com/blog/2-17-16-caring-for-elderly-parents-finances/
Gillen, M., Mitchell, V., & Turner, J. (2015). Estate planning. Retrieved from http://edis.ifas.ufl.edu/fy446
Goetting, M., & Schmall, V. (2017). Talking with aging parents about finances. Retrieved from http://msuextension.org/publications/FamilyFinancialManagement/MT199324HR.pdf
Lawrence, B. Want control at the end of your life? Here’s what you need. Retrieved from http://www.pbs.org/newshour/updates/decisions-future-documents-need-2/
National Endowment for Financial Education. (2017). Prepare for Financial Changes as Family Members Ag. Retrieved from https://www.smartaboutmoney.org/Topics/Retirement-and-Aging/Aging-and-Money/Financial-Changes-as-Family-Members-Age
Merrill Edge. (n.d.) 5 tips for talking with your aging parents about their finances and health. Retrieved from https://www.merrilledge.com/article/5-tips-talking-with-your-aging-parents-about-their-finances-and-health