Your parents have raised you and guided you throughout your life. Now, the dynamics may be shifting. They may not be able to handle their finances as they always have, and it becomes your job as their grown child to help them.
I’m so thankful that my parents, who are in their seventies, are still healthy. But my brothers and I know we need to have some important financial conversations with them before it’s too late.
This article was written by our staff writer, Kate Underwood.
Why Financial Conversations With Parents Are So Important
Even though your parents have been managing their money much longer than you, the reality of life is that as folks grow older, they lose some of their capacity to do so.
Plenty of roadblocks can impact parental finances as they grow older:
- An illness such as Alzheimer’s that affects their mental capabilities
- Costly medical issues that burn through their nest egg
- The need to finance long-term care in assisted living
The best time to discuss finances with your parents is as soon as possible. Ideally, that will be before they actually need any assistance.
You should try to ask the essential questions while parents are still of sound mind. Have them explain their wishes and sign any important legal documents before they are unable to do so with clarity.
Help Elderly Parents with Finances: Checklist
These are the basic financial topics or questions you should be sure to cover with your parents.
- Do they have any debt?
- Do they have retirement accounts and plans in place?
- Have they made a will?
- Do they carry long-term care insurance?
- What are their end-of-life wishes?
- How can you (or whomever they select) access important documents and accounts if needed?
Find out if your parents have any debt. Perhaps they’re still paying off their mortgage or your student loans. Make sure they have a plan for dealing with any debt so that doesn’t become a burden once they’re retired or facing big medical bills.
Whether your parents are still working or have been retired for a long time, talk to them about how they’ll finance their retirement years.
It’s good to know whether your parents have a solid plan to pay their expenses in retirement. This will give you an idea about how prepared they are for other issues that may arise.
Wills and Estate Plans
If you really want to help elderly parents with finances, this is a biggie.
Your parents need to have a legal will in place so that property and other assets are distributed the way they wish after their death. If they don’t, help them get in touch with a legal professional and draw up plans for their estate.
In addition to taking the legal steps of estate planning, it’s important for your parents to communicate their wishes to you and your siblings. It’s best if everyone knows what to expect from your parents’ estate, whether referring to physical possessions or a monetary inheritance.
These estate planning conversations may help ease tensions whenever your parents do pass away. Their passing will be an emotional time, but at least you can minimize the financial strain by planning ahead.
Long-Term Care Plans
Many people face the need for care in a long-term capacity such as an assisted-living facility. Ask your parents what their plans and wishes are in case one or both of them should require long-term care.
You also should discuss the possibility that your parents would move in with you or another family member in case they require a high level of care. This may or may not be an option, of course.
Whether or not you plan to take them in, it’s essential to talk about it openly and make sure everyone is on the same page.
Your parents may want to create an advance directive, which explains their wishes for their end-of-life circumstances.
- living wills, and a
- power of attorney
A living will is a type of advance directive. It spells out treatments your parents wish to receive (or not receive) in the event they are permanently unconscious or dying.
These are especially hard topics to approach with any loved one, but it’s important that you know what your parents want with regard to things like
- breathing machines,
- resuscitation, and
- organ donation.
You don’t want to be the one making those choices when they’re seriously ill.
Power of Attorney
Your parents should name someone to have the power of attorney. Whoever is named will be in charge of making medical decisions for them if they become unable to do so.
Access to Important Documents
You (or a sibling or other trusted family member) will need to have access to your parents’ financial documents. Remember this is so that when you need to pay things like their long-term care bills, their money is available to you.
Your parents may eventually be unable to articulate things like passwords or location of documents.
Find out how and where to get a hold of paperwork that documents their:
- financial accounts,
- advance directives,
- estate plans, and
- other important legal issues.
Tips For Talking About Finances With Your Parents
It’s great to want to help elderly parents with finances, but it may be awkward. It’s tough for parents to discuss serious money issues with their grown children.
Here are some ideas for making it easier to discuss financial topics with your parents:
- Make it about them. You’re trying to be aware of their wishes so you can help carry them out.
- Frame it as something you’ve been doing for yourself. For example, say “We’re working on our will and estate plan, and wanted to be sure you’re all taken care of, too.”
- Use the story of someone you know. Maybe a friend faced a problem where they needed access to parents’ accounts to pay for their medical care, but didn’t have the documents in place.
Financial talks with your aging parents are tough, but once you sit down and have those conversations, you’ll be glad you did.
Are you trying to help elderly parents with finances? Has it been a struggle? Or have you broken through?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.