BUILDING HEALTHY FAMILY FINANCES: Don’t Delay Having These Important Conversations

This is our third article in a 5-part series on Building Healthy Family Finances.

Not many people would say that they look forward to sitting down with their aging parents to discuss their finances.  If your family has a history of open discussions about money, this task might be slightly less intimidating, but if you’ve never broached this subject, it can be hard to know where to begin.  Regardless of how uncomfortable you may feel, speaking with your parents about money during times that are calm can help avoid hurt feelings and confusion in the future.

Your parents might be vibrant, energetic seniors who are engaged in meaningful work and relationships.  It can be hard to imagine them in any other light.  Or they may be slowing down and altering their lifestyle after a new medical diagnosis.  Unfortunately, as our bodies and minds age, our needs can change – sometimes suddenly.  While no one wants to think of their loved ones in a compromised mental or physical state, it’s a possibility we all face in growing older. One of the most important things we can do for our parents is to discuss the immediate and long-term future with them, so that we can understand their wishes and help them to prepare a legal and financial plan to support the life they envision.

Many people shy away from this discussion, for fear of how their parents may react.  Asking parents about the resources they have available to support their future might be misconceived as prying into their finances for personal gain.  Or they may feel defensive that you think they are incapable of handling their affairs correctly on their own.  However, with patience and mindfulness of the parent/child relationship, you can reassure them you are only trying to help them prepare for tomorrow as you ease into the following topics over the span of several conversations.  

Topics to Start the Conversation

  • Ask them what they want now.  Are they looking forward to an adventurous retirement?  Are they currently in retirement and want to continue to live near family?  Relocate to a warmer climate?  Do they have a financial structure in place to support their ideal plans?
  • How do they envision their future living arrangements?  Do they have thoughts on where they’d like to live if their care needs change?  Would they prefer to stay in their home or move to an active adult community?  An assisted living facility or in-home care?  What if they were living alone without a spouse?  Would they want to live with a family member?
  • Do they have estate planning documents in place and do they reflect their current wishes? Documents including wills, trusts, powers of attorney and health care proxies are all part of a well-balanced estate plan.  If documents exist, now is a good time to review them.  If they are willing to share copies and discuss them together, it is extremely helpful to know their plans and have copies available if the need arises.  If these documents need to be updated, you can assist your parents in connecting with an experienced estate planning attorney and an appropriate plan can be created in accordance with their wishes.
  • Health Care.  Are your parents managing health challenges?  Are they following up on all recommended doctor visits?  Do they have appropriate levels of insurance coverage and understand what is covered under their plan? 
  • Ask about their advanced health care directives, health care proxies and HIPAA forms.  As health care information is confidential, the HIPAA forms give permission for medical professionals to share information.  In younger years, a spouse might have been selected designee on a health care proxy.  As parents age, it might become more appropriate to update documents to include an adult child to legally speak on their behalf.  If a parent becomes unable to speak for themselves, whether due to a medical condition such as Alzheimer’s, or as a result of an accident, having the authority to advocate for their wishes can make a huge difference in the course of treatment they may receive. 
  • Are they handling their bill paying effectively?  Unfortunately, some seniors start to have difficulty with numbers as they age and managing the checkbook can become too much to handle.  If there is a Power of Attorney in place, that designee may need to step-in to take care of the bill paying as well as other financial issues such as tax return filings and investment management.       
  • Are they working with financial professionals?  Ask to be introduced to their financial advisor, tax preparer, estate attorney, etc.  Offer to be involved, if they want you there, so that you stay informed.  At a minimum, as for their contact information, in the event you ever need to contact them.
  • Ask how much your siblings know about these topics.  Are your parents interested in extending this conversation to include other family members?  No one wants to feel like people are talking about them behind their backs and it can be better to address this up front.  Knowing how much they are comfortable sharing with you and with others helps create the boundaries of what topics are “on the table” and which are “off limits”.

It may feel like just yesterday you relied on your parents for everything, but as time goes by, roles are redefined.  Your parents may need you more than they feel comfortable admitting.  Don’t let the awkwardness of bringing up an uncomfortable subject prevent you from helping your loved ones prepare for their future.  If you’d like more information about how a financial advisor can help, please contact us.