Consulting with Aging Parents about Finances
As our parents age, their financial needs change, as do their financial resources, and, sometimes, their ability to handle their finances. Small wonder that you as an adult child can become involved in your aging parents’ financial matters. Before that happens, it is important to discuss future finances with them – the sooner the better, since unexpected events can change things dramatically.
First, talk to your spouse and siblings (if you have them), so you’re all on the same page. Decide what topics to cover with parents, and who will be the point person contacting parents and keeping everyone informed.
Then, put your own future finances in order, so you’ll be prepared if your parents ask about your own situation. Be ready to talk about 401(k), pension plans, or other retirement accounts, college savings plans, disability insurance, life insurance, and wills for you and your spouse. You may not need some of those things, but consider them all. Now, how you proceed depends on your parents’ current situation.
If your parents are in debt, it’s nothing to be ashamed of, more than 60% of Americans over 65 carry some form of debt. Check the national Eldercare Locator for local organizations that can help with financial (and estate) planning. Help if you can, though, you will have to pay off their debts after they pass if you cosigned a loan or credit card. Also, their estate will have to settle their debts before distributing any inheritance.
If your parents are relatively healthy, approach the future finances discussion as a chance to gather information now, so you’re prepared for the unexpected. Know where they keep important bank documents and wills. Help them consolidate accounts. Find out their plans to fund their retirement, or long-term care if needed.
If your parents are well-off, get contacts for their estate lawyers and financial planners, and know where they keep important documents. They may not want to discuss specifics openly with you. If so, you can find out more about their own plans by asking for their advice on handling your finances, long-term care insurance, living wills, etc. Make sure you’re also on the same page regarding how to sustain their desired lifestyle over time.
If your parents are ill, talk to them immediately, while they’re mentally healthy. Make sure they have advanced care directives, and secure financial and medical powers of attorney for a family member to manage money and healthcare decisions when a parent no longer can. Determine long-term care preferences and budgets. Consider using a senior care expert.
During this whole process, it is essential to make sure that all owned property is insured whether or not encumbered by a loan; it would be catastrophic to take caution of all future details but to suffer an uninsured fire or other insurable loss to property your parents worked so hard for. Whether Homeowners Insurance, Fire Insurance, Landlords Insurance or Condo Insurance, all these policies will have a Liability component offering coverage not only should the property be damaged but also in the event of a case brought against your parents for negligence.