Money is a sensitive subject that many families avoid discussing. When it comes to family duties, parents are often tight-lipped because they aren’t used to letting their children take the lead. Additionally, adult children are sensitive when it comes to asking their parents about money since they do not want to seem like they are asking about their future inheritance.
But failing to talk to your parents about finances could put you in a difficult position if you ever have to take over managing their finances. The key to successful financial conversations with your aging parents is to use a respectful and tactful tone. Start slow; remember that this is something your parents have done by themselves for their entire adult life up until this point, and it might be difficult to relinquish their previous independence.
How to Start Talking About Finances With Your Parents
1. Keep it conversational.
Discussing your own financial planning with your parents may help put them at ease. Your parents may be more willing to talk about their finances if you talk about yourself first. Consider mentioning the ways you manage your own money, or mention a recent visit to a financial planner. This strategy makes the conversation feel more cordial and less like an interrogation.
If you have a family member that is close to your parents, appoint them as the person who discusses their finances. A one-on-one conversation is easier to have, as going in as a group may come across as aggressive and could make your parents defensive.
2. Remind your parents that you want what’s best for them.
Learn about their retirement objectives and projected financial situation. Find out what your parents have planned for health care and inquire about their plans for income sources like annuities. Nearly 70% of people will need some sort of long-term care as they age, so it is critical to have early conversations about who will provide the care and how it will be paid for.
3. Get a complete picture of your parent’s financial situation.
Make sure there’s a clear record of how much money there is and where it’s kept, and be sure to note who has access to each account. List the names, addresses and phone numbers for each account. Include all relevant documents in one place, such as deeds, co-op agreements, auto insurance records, etc. Reviewing your parents’ tax returns may be useful if you want to find any additional sources of income.
4. Clarify wills, power of attorney and health care proxies.
All adults should have a will, especially those who have dependents. You will need permission if you need to access your parents’ assets while they are still alive. Key financial decisions regarding your parents’ finances should be made by someone who is legally granted “durable power of attorney.” Ensure that your siblings are informed of the arrangement and that this person can be relied upon to act in your parents’ best interests. It’s important to decide who will become POA while your parents are able-minded, so there are no disagreements when it comes time to act as the POA. If they have power of attorney, keep track of everything and make sure it’s all documented.
Additionally, your parents must choose a “healthcare proxy.” This merely means that, if they become incapable, they have a person to make healthcare decisions on their behalf.
Reach out to Oasis Senior Advisors by calling 475.619.4123 or 914.356.1901 or filling out this online form for more information.
