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Caring for Parents

Family Matters

Talking About Finances with Aging Parents

By Ellen Rogin

Talking about money, under the best of circumstances, makes most people uncomfortable. Talking to your aging parents about their finances can be particularly difficult. Children are afraid to appear controlling or impatient to receive their inheritances, while parents are reluctant to surrender their autonomy or confront their mortality. Not discussing this vital issue, however, can lead to significant and irreversible trouble down the road.

By respecting the emotional charges that surround this situation, you might consider introducing the topic by saying, "It's important for me to understand your financial situation in case I need to step in and help in the future," or "What would be the best way for me to help you with your finances if something were to happen to you?"

Once you and your parents have agreed to discuss their financial situation, make sure you cover the following areas:

  1. Location of financial records: Create a list of all your parents' assets and other important documents and where they can be found. This list should include: brokerage and savings accounts; life insurance policies; annuities; wills and trust agreements; burial instructions; property and casualty insurance; credit cards; tax returns; auto ownership records; birth certificates; and safe deposit box number, bank address, and key location; and safe combination. As you compile the list, it's a good idea to note the date of purchase and cost of assets as this information will be required for the tax basis if assets must be sold as your parents age.

  2. Powers of attorney: According to Kerry Peck, a Chicago-based attorney specializing in estate planning and elder law issues: "Any discussion is incomplete without addressing the need for durable powers of attorney for property and health care." The power of attorney for property will allow you to make financial decisions for your parent if they become incapacitated or incompetent. The health care power of attorney delegates the ability to make health care decisions in the event your parent is unable to decide for themselves. This document often articulates a person's wishes regarding life support. "The use of the durable powers," adds Peck, "will ultimately save the family substantial expense and emotional trauma and enable them to manage the family's financial and medical matters without court intervention."

    For more information, visit's Powers of Attorney section.

  3. Estate planning: Powers of attorney do not eliminate the need for wills or the appropriate trusts. These documents are critical to ensuring that your parents' assets transfer according to their wishes. People don't like to think about death and may not want to spend money to plan for it properly. If estate planning is not done, however, the courts will decide for your parents how their assets will be distributed. You should urge your parents to contact an attorney who specializes in estate planning to help them prepare the necessary documents and, hopefully, to help them reduce estate taxes.

    For more information, visit's Wills and Trusts section.

  4. Investments: Discussing your parents' investments should include their asset allocation, the safety of the principal, and the income generated. Do your parents have sufficient assets to take care of the needs for their remainder of their lives? This information is especially important because it may influence your own long-term planning. If you are concerned that your parents lack adequate assets, you may need to start planning now to assist them in the future.

  5. Long-term care planning: What if one or both of your parents needs to enter a nursing home? Depending on their situation, long-term care insurance may be appropriate to help absorb the expense of nursing home or at-home care. There may be other strategies available to mitigate the potentially large nursing home costs. According to Peck, "If done far enough in advance, Medicaid planning can be used to benefit both the family and the parent going into a nursing home." For advice on this type of planning and to address your family's particular concerns, contact an attorney who specializes in elder law issues.

It is never too early for you to begin discussing money with your parents, and the benefits are twofold. You will be helping your parents prepare for their future while their experience will teach you to prepare for yours.



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