As parents age, they may be reluctant to talk about their money, healthcare situation, or what their arrangements are for the near-term and after they pass away. But it is something that adult children need to discuss with them…and sooner rather than later. Some children think that their parents may tell them it is none of their business or feel uncomfortable talking about it, but such a conversation is very critical. And it may be hard to get parents to cooperate; a 2012 Fidelity study revealed that 97% of parents don’t feel they need help with money.
The best time to talk to aging parents about money is actually before parents retire or their health declines. If that time has passed, then the talk needs to happen now. It’s much better than having to react in a time of crisis, or after a loved one has died (probate, etc.). Bringing in a loved one’s trusted financial expert or family attorney is also a good idea. A face to face conversation is best, whether at home with just the parent(s) or at the office of one of these professionals. Make sure you have researched the topics you plan to discuss, beyond whether a will exists, and find out if your parent has life insurance, advanced healthcare directives, has planned their estate and so on.
Always remain non-threatening in your conversation, making sure the parent feels that they are retaining a sense of control. Tell them that you love them and just want to make sure their financial needs are taken care of for the future. Don’t have a “You should” or “You don’t” attitude, because it will put them on the defensive. Instead, frame statements with an “I” such as “I’m concerned about making sure you live comfortably.”
Make your points by framing someone else’s advice. Example: “I just read an article about how ten simple tips for managing money as you get older. Mind if I share some of these?”
Make your suggestions beneficial to your parent. “Here’s something about saving money on your grocery bills.”
Make them feel intelligent. “Did you hear about the scam going around that involves people sending emails asking for your bank account? I know you’d never fall for this, but thought you might want to warn your friends.”
Once the conversation is in full swing, it is important to gather a list of all accounts and find out whether they have any outstanding loans (such as mortgage or credit card debt) so there are few surprises down the road. There is a useful workbook called the What If…Workbook by Gwen Morgan that has pages to record account numbers, passwords, contact information for services (such as lawn mowing), details about last wishes and more.
Many financial experts advise to keep wills and other important documents in a strongbox instead of in a safety deposit box because the latter may not be accessed without a court order. There are also websites that allow financial and legal documents such as property records to be scanned and stored.
Once a person passes away, many financial institutions require a death certificate be presented before they will divulge any private information (such as the bank, which may not be able to give such details as if there are mortgage payments in default—and how much); however, it could take a long time to receive the death certificate and this could cause hardship to the adult children who have to pay the bills. There are instruments that can grant more access to funds or information such as revocable living trusts (which allow immediate transfer of assets to the beneficiaries outside of probate, and are more difficult to contest than a will), durable power of attorney or joint bank accounts.
Remember that this same conversation could and should happen between you and your children one day. Knowing what to do, how to approach your aging parent and how much easier a “money talk” makes the situation for all concerned can be immensely beneficial.