It is extremely difficult for families to discuss who will make financial decisions for an aging family member who loses the ability to safely handle their money.
Most of us, our parent's included, believe the information is confidential not something you burden your children with. Deeply rooted attitudes will not change. You need to work with them; by offering assurance you are not trying to take financial advantage of them, or taking control of their lives. Reassuring them early in the conversation works far better than making an argument that “it’s time, and you’re getting old”. This blunt approach will only exacerbate their fears of losing control over their lives. Secrecy is usually based in these fears.
Most people who have discomfort with the subject of aging parents and finances procrastinate talking about it until a crisis comes up and no one does not understand what the parents have or where to find any documents when needed. Unnecessary stress and panic by adult children result.
Another common scenario is that dementia gradually affects a parent until they can’t remember what they have or where the records or the money is kept, leading to the expense and necessity of getting the court involved to allow someone else to take over. Adult children regret waiting and doing nothing until they are forced to hire a lawyer and get a court order via a guardianship to get into the parent’s accounts.
A smart way to prevent the worst from happening to you is to make a point of bringing up the subject with your aging parent at a specific time. Planning to do this after a birthday, a family event or a holiday is a good choice. Family may be together. You can ask your parents to extend the visit or your time with them to begin the discussion. Include any willing family members who may share the responsibility for aging parents in the future. Set a date and time and invite all to be present.
Make sure your approach is respectful and compassionate. It is helpful to directly express acknowledgement of your parents’ reluctance to bring up their finances for discussion. You can put it on yourself: you are concerned that if something went wrong, you would be completely lost how to help them. You might also say you want them to maintain their independence for as long as possible and you are willing to take the lead to assure that, but you can’t do so without the information anyone would need. If you have a friend or other relative who has had a recent health crisis, you can use that person as an example of why you need information.
There are many elements you need to include in the conversation with your parents about money. Here are some basics. It may take more than one meeting but be sure you finish the conversation before it is too late, but at least get started.
1. Legal: have they done estate planning? Who is their attorney? What legal documents do they have in their possession? Is there a will, trust, durable power of attorney for finances and healthcare directive? May you speak with the attorney? With permission most Estate Planning attorneys are willing to let family members know of their parent's decisions.
2. Healthcare: what medical insurance do they have besides Medicare? What is covered? Is there long term care insurance? Do they have assets set aside to pay for care at home should they need it one day? What amount is available? Where are these documents located?
3. Income and expenses: What income do they have and what are their debts and expenses each month? Where are the records for these? Do they have a financial planner?
4. Financial records: Where do they keep their tax returns? Who prepares them? Where are their bank accounts, brokerage accounts and other records of assets maintained? Do they bank online? Where do they keep their user names and passwords?
Keeping electronic or paper records to organize of all of this information will be essential when a health crisis occurs. If your parent loses the ability to remain independent over time, you can gradually take over responsibilities. Some people start with bill paying when a parent makes mistakes, such as paying bills twice or forgetting to pay them. You can offer to be their backup.
If you have siblings, be open and painstakingly honest in all dealings around your parents’ finances. Keep track in writing of every penny you spend on their behalf. Do never co-mingle their finances with your own. This can prevent suspicion and family conflicts later on.
Set up the time for your conversations with your own aging loved ones, you’ll be glad you did.
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