As your parents age, your role as a child reverses. You will always be their child but now that they are getting older, your parents may not be up to par with all that is going on in the world involving their financial well-being. You may need to address money issues very carefully with them to show that you have their best interest at heart. They may have a hard time giving you all of their financial information but once you begin the conversation, it may help bring peace of mind and relief to both you and your parents.
Start slowly, and try to meet your parents where they are.
Your first attempt to discuss your parents’ finances may have a rocky start. It may help to offer some basic examples from others who are in the same boat. Perhaps start by explaining how every time your friend goes to see her parents, they ask the same questions: “Do you remember where my passwords are? Or what they are? What do I do when I forget a password?” and so on. Let it sink in and hopefully they will start to share this information with you.
All you can do is give them the information and offer to partner with them on a strategy that they want to take. It’s important to meet them on their terms and not be overly forceful with an approach they are not comfortable with.
Explore your options now to provide support for your parents as they age.
Some family members may be put in a position where they need to support their aging parents financially, as caregivers, or both. It can be hard to know what to expect until you get to the point where your parents need help. This could inflict some guilt on their part because they don’t want to be a burden and that they perhaps didn’t plan adequately for this day to arrive.
If you can get your parents to open up and share their financial picture with you, it could help determine whether they are in good shape or if you need to find a supplement to support their needs. Having this knowledge before it’s necessary will help you plan for the inevitable.
Consider getting documents in place.
These documents will help ensure that your parents’ wishes are followed and allows you to manage their affairs if that becomes necessary.
Revocable living trust: This allows your parents to appoint a trustee who can manage the trust and its assets in the event of incapacity.
Power of Attorney (POA): This legal document gives a trusted individual control over any financial matters your parents specify, such as paying bills, making gifts, or managing property. Without a POA, a court may appoint a conservator to manage their financial affairs. This could make it a bit more complicated for you.
Advance Directive: This is also called a Living Will. This legal document allows a person to spell out their preferences regarding medical intervention and end-of-life care. You may want to consider exploring if your parents also want to establish Medical Power of Attorney which gives a loved one the legal authority to make medical decisions regarding any situations not covered by the directive.
HIPAA Authorization: The Health Insurance Portability and Account Act’s (“HIPAA”) privacy rule established a national standard to protect an individual’s medical records. A signed HIPAA authorization form would allow you to speak with your parents’ doctors about their medical condition. It’s comforting to know that in case your parents become unable to speak for themselves about their medical care, you are able to speak with your parents’ doctors about their medical situation.
Long-Term Care Insurance: You will want to find out if your parents have long-term care insurance. Costs continue to rise for long-term care. According to the U.S. Department of Health and Human Services, the cost for long-term care currently ranges from about $50,000 to $100,000 per year. It is important to understand the full financial picture so that you can make a plan and not be caught off guard with unexpected financial obligations. The time to educate yourself is long before your parents require any type of additional health care.
Scams: While you are discussing their health care, it is a good idea to alert your parents of scams targeting everyone especially senior citizens. You may want to start with reviewing their bank accounts to see if there are any random subscription charges that they did not authorize. This is a common scam.
Remind them not to give out any personal information especially their social security number or bank account numbers. Alert them on how to handle unsolicited phone calls and texts – just don’t answer them! If they use a computer, try to get them to understand not to click on links within an email. It’s important for everyone to be aware of how these things start and what they look like because some of them are incredibly believable.
Suggest they add a trusted contact (son/daughter) to their financial accounts, which allows a financial firm to talk to this person in addition to themselves to be able move more quickly when addressing suspect fraudulent activity. Aging parents may get frustrated when trying to call their bank or credit card company, having to go through the automated procedure to push the correct button to get a person. If this trusted person is already on file on their accounts, they will be able to talk on their behalf and hopefully get answers more quickly to stop any fraud.
Important Documents and Information: One final note: have your parents not only organize their important documents, but share with you where to find them. Be sure they are organized and stored in a safe, easily accessible location. Typically, the following documents will be most important for their finances:
- Bank/Brokerage Statements and Account Information
- Accounts and account number
- Online bank/brokerage passwords and security PINs
- Locations of any safe-deposit boxes, along with where to find their keys
- Recent bank and brokerage statements.
- Mortgage and Credit Information
- List the outstanding debt for all
- Regular payments and dates due
- Include account numbers
- Names of financial institutions on the loans and credit cards
- Contact information such as address and phone number
- Insurance policies
- Pension and Other Retirement Benefit Summaries
- Social Security Payment Information
- Contact Information for Financial and Medical Professionals
- Doctors
- Lawyers
- Accounts
- Securities Professionals (Financial Planners)
With this information in hand, you and your parents will be able to have some relief knowing that you are prepared for the unexpected. Financial discussions with your parents can be uncomfortable at first, but your parents should feel good knowing that they have your support and their wishes will be honored. They may now look at you as a partner as well as a support system to help them through whatever happens alleviating their worry. And that is a great feeling for all of you!
