Financial talk with your parents during Older Americans Month may not be easy, yet it certainly is important. It will help you help them as they meet the inevitable challenges of aging, and help you get answers now about how to manage the financial responsibilities you may have to assume on their behalf. What do you really need to know?
If you have aging parents, you know the time will eventually come when you may be called upon to help with their finances. One or both of your parents may become ill, incapacitated, susceptible to scams and fraud, or unable to keep up with their financial affairs as their mental and physical abilities wane. It will be easier to intervene and prevent problems if you have talked to them about their finances in advance. Obviously, this is not an easy discussion to have, but by planning ahead and having these difficult discussions before a crisis arises can help ensure their wishes are carried out and help minimize problems with other family members in an already difficult time.
So, how do you even begin to approach this subject? Let them know that it will be easier for you to help them later when they need you if they share the details about their finances with you now.
The time for preparing powers of attorney and living trusts to give someone else the authority to make decisions about financial affairs or health care is before the need arises, while your parents still have their mental faculties. If your parents aren’t mentally capable signing these documents, you may have to seek legal guardianship, which can be a long and painful process. So it is imperative that these issues are discussed. It may still be too early to move forward with these measures, but it should at least be out on the table so that if health does start to deteriorate, prompt action can be taken to get the documents in order and it won’t come as a surprise to bring this topic up in an already difficult time.
The more you know the better. Having an understanding of their complete financial picture is helpful, but more important are the answers to questions such as: Do they have a will? Where is it kept? Do they have a living will or medical directives so someone can speak for them in case they are unable to speak for themselves? Do they have a durable power of attorney so someone can handle their financial affairs if needed? If your parents are unwilling to discuss these details with you, at the very least they should tell you where they keep their important financial documents in case you need them in an emergency. Take baby steps. This is an important first step, and ultimately will be the most important thing to know if the unfortunate happens.
Other information you should know:
If it becomes necessary to take over the administration of your parents’ finances, it’s important to respect their rights and wishes. Give them as much control as possible and don’t make them uncomfortable. Keep their money separate from yours. Involve them as much as possible. Keep them informed.
Finally, let this be a reminder for you as well. It’s time to look at your own legacy planning. So, go through your financial accounts and make sure your beneficiaries are up to date, update that will, or make a will for the first time. None of these things are fun to think about, but they are just as important to your financial plan as saving and investing for the future. Your family will thank you if you take the time to get your finances in order.