How to Talk to Your Aging Parents About Their Finances

How to Talk to Your Aging Parents About Their Finances

Help Your Aging Parents Before They Need Your Help

If you have aging parents, you know the time will eventually come when you may be called upon to help with their finances. As we continue to extend our lives to 80 and beyond, there’s a better chance that the resources people put aside for retirement just don’t last as long as expected. In addition, illness later in life can render someone incapable of being able to take on their financial obligations. That’s where you come in as their child.

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 isn’t an easy discussion to have, and in some cases and cultures talking about money was off-limits. But by planning ahead and having these difficult discussions before a crisis arrises 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. Take baby steps. 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. This is an important first step, and ultimately will be the most important thing to know if the unfortunate happens.

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.

What do you really need to know? 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?

Other information you should know:

  • Social Security numbers.
  • Details of insurance policies, including health, life, and long-term care.
  • Health records.
  • Medicare numbers.
  • Debts and payments.
  • Income, including retirement plans, social security, annuities, dividends, etc.
  • Savings and investments, including bank account numbers and names of financial institutions.
  • Tax returns.
  • Location of safe deposit boxes and keys to the boxes.
  • Names and phone numbers of legal advisors, doctors, attorneys, insurance agents, accountants, etc.

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.

Sure, this is an awkward discussion to have with your parents, and it won’t be easy. That’s why it is important to start slowly, and start early. Don’t just sit them down and tell them that you need to know all of their financial details. Instead, approach the situation casually. Maybe start by just bringing up the topic of wills over dinner or something. Mention that you and your spouse just updated your own will. This will often open the door to a discussion about your parents’ will, or lack of one, and from there you can learn more about their situation. Even better, if you learn they don’t even have a will, this is a great opportunity to get them to take that next step. From this initial discussion you will then be in a better position to go a little deeper and tackle some of the more serious issues.

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 this stuff in order.


Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.

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