Discussing Finances with Aging Parents
Talking about money with your aging parents can be awkward but is a necessary step to make sure that their needs will be met during their lifetime. Taking a few minutes to talk with your parents about their finances can give all of you more peace of mind.
Have they prepared a will and other necessary documents? No one would knowingly choose Uncle Sam as the executor of their estate, but for those who die without a will, that's exactly what they've done. Make sure that your parents have valid, updated wills in place as well as other important estate planning tools such as trusts, living wills and durable powers of attorney (for health care), if applicable. It's also important that they provide you with the physical location of such documents.
Do they have a list of their important documents and their whereabouts? Helping your parents organize their financial documents now can save a lot a headaches upon their death or incapacitation. Consider compiling a simple checklist that they can go through that specifies details (including physical location) about bank accounts, safe deposit boxes, life/health/homeowners insurance, real estate holdings, pension plans, securities, debts, and other assets and debts. Provide copies of the checklist to several trusted family members.
Have they provided adequately for retirement? Advances in the field of medicine are making us live longer, a fact that must be considered when determining how much money your parents will need to support themselves during their lifetime. While gifting your estate to your family members can be a valuable estate planning tool, it can be disastrous if not combined with a good retirement plan that takes into consideration an extended life span.
Have they made their last wishes known? Because older people sometimes fear talking about death, many of their last wishes go unfulfilled. Try to get them to discuss such preferences as cremation vs. burial, and share their thoughts on topics such as assisted care facilities and what measures should be taken to extend life in a terminal situation. These topics can be brought up directly or indirectly in a typical conversation.
Because the details of a person's estate plan are so personal, it may be difficult to ascertain how to broach the subject with your parents. Here are some gentle ways to open a dialog on the subject:
Discuss your own estate planning efforts. It's possible that your parents may not associate estate planning directly with death if they see a relatively young person taking action to ensure the smooth transfer of his assets upon death. This may also give you the opportunity to refer them to your financial advisor if they have not yet developed a plan.
Have an unrelated party bring the subject up. Invite a friend or associate over that is well-versed in financial matters. Listening to this person talk about the benefits of estate planning may be just the push your parents need to move into action on their own estate plan.
Test the waters. If it appears that your concern for your parents' financial well being is being misconstrued as an unusual level of interest in their assets, you may need to back off and approach the subject at a later date. But don't put the deed off indefinitely - you may find that once you get around to it again, it may be too late.
The information presented in this document is of a general nature only and should not be relied upon to replace professional advice. Before acting on this information, talk with a professional advisor as laws and regulations are constantly changing. Readers accept full responsibility; no document found here is a substitute for a consultation.