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Saturday, May 25, 2024

How to talk to your elderly parents about finances

How to talk to your elderly parents about finances

07.27.2021

It’s hard to watch your parents age — after all, you’re used to them taking care of you. When the tables turn, however, it’s important to consider how you’ll bring up certain financial conversations (and know exactly what to talk about).

If you feel nervous talking to your parents about their money, you’re not alone. In fact, one survey found that 73% of Americans haven’t had extensive financial talks with their aging parents.1

You may feel like you don’t need to have a conversation about your parents’ finances if your parents are still healthy — but that’s precisely when you should broach the topic. If you wait until your parents’ health declines, you may be forced to make decisions on the fly.

So let’s take a look at a few types of conversations you may want to have with your parents. You don’t need to use these exact words, nor do you have to have all of these conversations all at once. Feel free to break them up into different days or even over the course of several months.

Conversation one: “Let’s talk about where you keep your money.”

Learn about the whereabouts and basic details of all your parents’ financial accounts, including their brokerage accounts, checking accounts, savings accounts and more.

Conversation two: “Can you tell me where you keep the titles to your property, mortgage information and insurance policies?”

Understand where your parents keep their real estate documents, like deeds, titles, lease agreements and tax bills. Write down contact information for brokers, real estate agents and attorneys your parents have worked with. Get the name of your parents’ homeowners insurance company and any other applicable insurance companies.

Conversation three: “Let’s talk about debt.”

Talking about debt can get really touchy, so approach the topic delicately. Your retired parents may find it difficult to manage their finances without regular income coming in, and if you find that they have trouble organizing their finances, you may need to dive into budgeting tactics with them.

If you feel that their debt load has reached a level that they can’t handle on their own, you may want to help them tap into credit counseling and/or debt management services. Seek reputable financial professionals to weed out scammers.

Conversation four: “Can you tell me where you keep your tax returns?”

You may find it helpful to review your parents’ tax returns to look for any additional income sources. Note that when your last surviving parent dies, the executor of your parents’ estate will also need to file a tax return and report income up until the date of death. All credits and deductions to which your family member was entitled may be claimed, according to the IRS.

Get the name of your parents’ accountant so you know who handles their tax returns if they don’t file taxes on their own.

Conversation five: “Do you have a safe deposit box at the bank?”

Find out whether your parents have a safe deposit box at a local bank. Ask them what it contains and where you can find the key if you need to get into it.

You may even want to consider moving the contents of your parents’ safe deposit box to another safe location if you don’t think they (or you!) can keep track of the keys.

Conversation 6: “Do you have a life insurance policy?”

You may want to tread lightly on this topic as well because you don’t want to appear as if you’re probing for information about whether you’re listed as a beneficiary on your parents’ life insurance policy.

You can approach it from the standpoint that you want to know more about their wishes — tell them that you want to uphold the life insurance policy that they purchased years ago.

Get the name of the life insurance company. Ultimately, you should get the contact information, phone and email addresses for any professional your parents work with, including their financial advisors, attorney, life insurance agent and other professionals they use.

Conversation 7: “Let’s talk about future plans, like long-term care.”

Research suggests that more than half of people turning 65 today will require some type of long-term care, and 14% will need it for five or more years.2

Long-term care can be prohibitively expensive, the median cost of a private room in a nursing home was nearly $9,000 monthly in 2020,3 so it’s a good idea to find out if your parents have a long-term care insurance policy.

What’s more, a 55% of parents expect that their children will help take care of them as they age,but only 17% end up caring for their parents at some point.5 Talking through this delicate topic will clarify expectations and help you create a plan for your family’s future.

Conversation 8: “Do you have a will?”

Your parents need a will if they haven’t yet gotten one drafted. Probate involves proving that your will is legally valid and executes your parent’s instructions. If your parents have a last will and testament, it makes the probate process easier on you. If your parents die without a will, the probate court relies on your state’s intestate law to figure out how to distribute your parents’ things.

Help your parents draft a will if they don’t already have one. Take a comprehensive view of your parents’ assets, including real estate, and where it will go after they die.

How to have these conversations

Journalist Cameron Huddleston acknowledges that it isn’t easy to have these conversations. She wrote a book, “Mom and Dad, We Need to Talk,” about dealing with the discomfort that you can encounter when talking to aging parents about important financial concerns. The idea stemmed from her own experience of raising kids while taking care of her mom, who had Alzheimer’s. The book helps adults navigate tough conversations with their parents about long-term care, retirement accounts and end-of-life planning.

“Being financially literate enables us to make smart decisions about our money,” Cameron told Empower. “It helps us understand the benefits of budgeting, the dangers of taking on high-interest debt, and the necessity of saving and investing for the future. It’s the key to taking control of our money and improving our financial well-being.”

Here are a few tips about talking to your parents about these conversations.

Tip one: Invite your parents to talk in a neutral place.

Where is the best place for you and your parents to have these conversations? You might pick a relaxing time of the day in a safe place, such as your parents’ favorite spot in the living room. (You probably don’t want to have these conversations around the Thanksgiving table with the entire family present.) In other words, choose the right time and place for these conversations.

Tip two: Don’t make it all about money.

You don’t have to make the conversation about money, especially if your parents have strict taboos about the subject. For example, you could talk more generally about their wishes, something like, “I appreciate everything you did to take care of me, and I want to do the same for you. I want to make sure all your wishes are fulfilled.”

Remember to keep in mind that this can be a very difficult topic, so be sensitive about handling the conversations. You may not want to express strong opinions about how they “should handle” their money and other assets.

Tip three: Take it slow.

When you’re talking about difficult topics, such as debt, lack of a will or long-term care planning, your parents may get overwhelmed — and you might as well. Remember, you don’t have to have all the conversations at once or even within the same week. Take a few months to talk if you need to.

Tip four: Don’t wait until a crisis strikes.

No matter how difficult it is, you don’t want to wait to have these conversations for the first time when something terrible happens. Ideally, these conversations should occur when your parents are still healthy and mentally alert.

Remember, this isn’t an exhaustive list of everything you should talk about with your parents.

1 Gobankingrates, “73% of Americans haven’t had this crucial talk with their parents” June 2019.

2 Consumer Affairs, “Long-term care statistics,“ January 2022.

3 Consumer Affairs, “Long-term care statistics,“ January 2022.

4 Bay Alarm Medical, “Caring For an Aging Nation,” January 2018

5  Center for Retirement Research at Boston College, “How Much Long Term Care Do Adult Children Provide?” 2017

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