How to talk finances with your aging parents

Talking about finances with your parents can be awkward. Aging, health, and money can be thorny topics when handled individually, but are even more difficult when combined.

Less than one-third of families report having had satisfactory conversations around aging and end-of-life planning, and more than two-thirds of those conversations don’t happen until there’s a critical emergency or health crisis.¹

This is a difficult but essential conversation for protecting your parents’ well-being, supporting their retirement plans, and helping them manage their finances.

Here are some tips on key issues to cover.

Choose your timing and wording carefully

Your parents may be protective of their privacy or find it difficult to talk about money with their kids. It may be helpful to introduce the topic by bringing up decisions that you’ve made around your own financial future.

Be considerate of timing and avoid busy holidays, which may already be stressful. The conversation may come as a surprise to your parents, so be patient and give them the time that they need; yet be firm about obtaining information. Remind them that you’re having this discussion because you care, and it’ll help when it matters most.

If you have siblings or other family members that are directly involved in your parents’ finances, appoint the family member that has the closest relationship with them. Initiating the discussion as a group may feel aggressive and could make your parents defensive.

Remind your parents that you want to understand their wishes for their future

Get an understanding of what their goals are for retirement and what their financial future will look like. Discuss their plans for income sources such as annuities and find out what their health care coverage will be. Nearly 70 percent of seniors will require some type of long-term care service as they grow older, so it is important to discuss early and understand who will provide the care and how it will be paid for.²

Get the full picture of your parents’ finances

Be clear about where all money is kept, how much is there, and who has access to it. List all account numbers and contact information. Also list deeds, co-op agreements, car insurance records, and any other assets in one place. It may be helpful to review your parents’ tax returns to look for any additional income sources.

Avoid safety deposit boxes

It can be common practice to keep papers and valuables in a bank safety deposit box, but this can cause issues. Apart from losing the key, you may not be able to obtain information from the bank unless you can present power of attorney documentation or a death certificate. These documents can be time-consuming to obtain after the original safety deposit box owner passes away or becomes incapable of handling their own financial affairs. Consider alternatives for safekeeping, such as a fireproof, waterproof document bag stored securely in your home.

Clarify wills, power of attorney, and health care proxies

All adults, especially those with dependents, should have a will. If you need to access your parents’ assets while they’re still alive, you’ll need authorization.

Someone should be legally designated as having “durable power of attorney” to make key decisions regarding your parents’ finances. Make sure this person can be trusted to act in your parents’ best interest and that other siblings in the family are aware of the arrangement. If you have power of attorney, keep records and document all transactions.

Your parents also need to elect a “health care proxy”, a person to make heath care decisions on their behalf if they’re no longer capable. It’s important to decide who should have power of attorney and be the health care proxy while a person is still of sound mind.

Reach out to experienced professionals for legal and financial advice

Get the advice of a lawyer specialized in elder law and estate matters within your state and speak with a qualified financial professional for guidance in assessing issues, making vital decisions, heading off potential conflicts, and putting paperwork in order.

Make sure that you have the passwords necessary to access all digital files, Biometric access, such as fingerprints or face scans on phones can cause obstacles for surviving relatives.

If you have power of attorney over your parents’ money, you have fiduciary responsibility. That means you’re legally obligated to put the financial interests of your parents first.

Addressing these important issues head on will help you tackle potential problems before they arise. When everything’s in place, you can feel confident that you are supporting your parents’ total well-being.