It may be a difficult conversation to have, but as your parents get older, you will need to start talking to them about their finances. It might not be easy getting them to open up about their finances, but it’s a necessary step in the planning process.
You probably still remember your parents sitting you down for an awkward ‘birds and bees’ conversation when you were a kid. As you were squirming through that rite of passage, you never could have imagined that, years down the road, it would be your turn to initiate a similarly delicate, but necessary, conversation with your parents.
Now that you’re an adult, you need to have the uncomfortable conversations: the ones about your parents’ ageing and end-of-life concerns, and all the accompanying financial considerations. It’s tempting for both parents and children to put off the Big Talks, but this does nobody any favours.
Give a heads-up
While some people love surprises, few would appreciate having this topic sprung on them. In other words, inviting the folks over for Sunday dinner and then laying out an outline for their death as an unexpected appetizer may not be a great way to start. Instead, let your parents know ahead of time that you would like to talk to them about this topic.
Need some help with the introduction? Try this (you could even email or text it to them):
Hey Mom and Dad, a friend of mine just learned that her mom is sick and doesn’t have long to live. It really shook me up and made me appreciate that you guys are healthy, and we still have a long time with you. My friend is at her wits’ end, trying to balance the emotional aspect of this along with figuring out what her mother would want. Watching her struggle with this, I think it would be a good idea if we had a family meeting sometime soon to talk through these kinds of things.
Ask essential questions
You will need to know your parents’ financial specifics, but your conversation should help you to understand their needs and wishes as well. Gathering this information lets you get the right plan in place so that you aren’t scrambling to gather documents and make important decisions when a parent unexpectedly becomes ill or injured.
Here’s a list of questions to guide your conversation and prepare you for making a financial elder care plan for your parents:
Do you have a will?
If they don’t, it’s unlikely your parents have much else in the way of estate documents. If they do, here’s what you need to know: how recently the will was written, who will be appointed executor, and where the original document is. If the will is more than five years old, suggest they review it to make sure their current wishes are represented.
Who’s on your team?
If your parents work with financial and legal professionals, ask for a list of their names, addresses and phone numbers (or make sure you know where to find that list if you need it). You may need to involve their attorney, accountant and financial planner in estate matters. Include the names and numbers of your parents’ doctors, in case end-of-life medical decisions need to be made.
Do you have a power of attorney?
This designation gives another party the ability to make both legal and financial decisions if a person is unable to do so themself. (If no paperwork exists, many assume that a spouse or the oldest child gets the default power of attorney; however, the decision will be made by a judge.) Without this document, a spouse may not automatically be able to tap funds to pay for long-term care or sell a home that the couple owned jointly.
What are your current sources of income?
This is perhaps the most difficult question to ask, but it’s better to know what you’re facing now rather than be unpleasantly surprised later. If your parents have investment income or a pension plan, get account details and find out where they keep important documents.
Do you want to go into a care home?
Most people struggle or can’t talk to their parents about the possibility of care. It’s hardly surprising, because it’s such an emotional subject, and it opens up the issue of what you both expect from your relationship.
If they want to move in with you, for example, but you don’t have the space or the stamina, then you need to be aware that you’re opening up a conversation with the potential to take a difficult turn. However, if you leave the issue until the point at which your relative needs care, you introduce time pressure, stress and emotion into the conversation – which is the last thing either of you need. It’s therefore important to discuss this well in advance.
Once you’ve started the conversation, if you find they are open to the idea of a care home, you can also benefit enormously from talking about the cost of care. It can come as a shock to parents that they must pay for their own care, so the earlier they think about it and start planning, the better. If they own their own home, and their spouse or dependents won’t be living there, you can broach the idea of selling the property or renting it out. This may also be an opportunity to find out about any savings or insurances they have set aside to cover the cost of care.
In conclusion …
The above list is by no means extensive but rather aimed at helping you start a very difficult conversation. It’s not important who starts the conversation or how long it takes to get the information you need, just get the ball rolling. You’re not just doing this for you, although it will help you to plan. You’re doing it for them too, so you can be there for them when they need it.