Financial Planning for Elderly Parents: 3 Talks to Have ASAP

Let’s be honest: It can be awkward for adult children to talk about money with their parents. Especially if you haven’t done it much before.

But avoiding the money talk, especially as our parents age and their needs change, can lead to a host of financial problems down the road.

These talks are tough — but they’re also really important. Getting the conversation going early on — before a crisis strikes — and in a natural way can do a lot in helping your family plan its financial future.

3 Financial Planning Conversations to Have With Your Parents

It isn’t all about money. There are many issues adult children might want to discuss with their parents, including long-term care, housing, and splitting assets and responsibilities.

Consider the time, place and people you want involved in these talks. Depending on your relationship, you might want to schedule a specific time to discuss money with your mom or dad.

Or it might be easier to casually bring up the topic in a non-pressurized environment, like when you and Mom are putting the dishes away after Thanksgiving dinner.

When you talk, consider having a one-on-one convo to start. Involving other family members or spouses might make the situation stressful or derail the talk entirely.

“Every family dynamic is different,” said Marcy Keckler, vice president of financial advice strategy for Ameriprise Financial. “But in general, if the parents are talking with just their own children, that family dynamic is going to be potentially a little bit simpler.”

1. What’s Your Money Situation Look Like?

Your parents might be great at managing their money. Or maybe they used to be, but now, you’re not so sure.

As our parents age, they may struggle to keep a handle on their personal finances. Bills can get overlooked. Taxes might not get paid on time. Simple forgetfulness can lead to major financial headaches, and our cognitive abilities naturally decline with age.

Older adults may also be more susceptible to fraud and scams. Bad actors target the elderly in higher numbers and the elderly are more likely to fall for these deceptive tricks.

This can wreak havoc on your parent’s finances — and you may not realize what’s going on until it’s too late.

You don’t need to know specific dollar amounts at first to launch a meaningful conversation.

For example, you could ask Mom or Dad to give you access to their online accounts — just to keep an eye out for unusual credit card charges or to help streamline monthly bill paying by getting all their accounts online and enrolled in autopay.

Later, if you need to get more hands-on with managing their finances, the transition feels easier and more natural.

If your parents are still healthy and capable, encourage them to create a file or notebook with their essential financial information, including their bank account number, the location of any safe-deposit boxes, investment account passwords, the phone number of their accountant and credit card details.

If they seem reluctant, let them know you’re coming from a sincere place and just want to help out if an emergency arises. If they went into the hospital, who would make sure the bills got paid on time?

If your parent’s mental capabilities are waning due to dementia or following a stroke, it’s wise to consult an elder law attorney.

This professional can help guide you through important steps like putting a health care proxy in place and naming a durable power of attorney. They can also give you advice on the best ways to manage your elderly parent’s financial affairs.

2. Who Will Handle Long-Term Care?

Another difficult topic is long-term care planning.

This discussion is about more than money. It involves figuring out where your parents will live in the future and who will take care of them.

Discuss the type of care your parent wants if it becomes too difficult for him or her to live independently.

Most older adults want to age in place in their own homes for as long as possible with the help of family members and home health aides. Others may eventually require 24/7 care in a nursing home or assisted living facility. Learn about your parent’s preferences and talk to them about how much each option could cost.

It can be challenging, but listen to your parents and hear them out. Don’t start the conversation just to impose your own viewpoint and opinions.

It’s hard to think about becoming incapacitated, and older people often struggle to cope with emerging limitations, disabilities and failing health.

They might feel like they’re losing their independence, especially if they’re having trouble performing activities of daily living. Patience and compassion can go a long way in these conversations.

If your parents are still young and in relatively good health, buying a long-term care policy could save your family a lot of money down the road. However, the price of a policy could be cost-prohibitive if your parents are older or in failing health.

You may want your parents to live with you as their health declines, but remember, you’ll likely need to buy equipment or modify your home to safely accommodate them.

Pro Tip

Here are tips for how to become a paid caregiver for a family member.

Or you may need to consider hiring a part-time health care professional to help out. Find out what long-term home health care services Medicare covers and what assistance you may need to pay for out-of-pocket.

It’s always important to consider what will happen if your other parent or their current spouse dies first. If your dad always helped your mom with grocery shopping or drove her to her doctor’s appointments, who will take on these responsibilities if he passes away?

Talk With Your Siblings

If you have siblings, it’s important to get on the same page with them.

A child who lives nearby may turn into the de facto caregiver — even if they don’t want or can’t handle the responsibility. A child who lives far away can feel excluded from important decisions or guilty for not helping out more.

It’s important to talk about any imbalances, Keckler said. Siblings often have their own financial and family obligations to contend with, so dividing everything equally isn’t always an option. One might be able to pay for more than another.

Acknowledging this can help.

“Give each other credit for different types of support and care for the parents,” Keckler advised. “I think if siblings can make sure that they acknowledge the contributions of each other, that can be one way to ease sources of tension.”

A sibling with limited financial resources who lives far away can still help take care of Mom or Dad in other ways.

For example, handling online banking, paying bills, ordering household supplies or scheduling appointments can be a huge help, and these tasks can be done remotely with relatively little effort.

3. Are Important Estate Planning Documents in Place?

As our parents age, it’s essential to make sure estate planning documents are in place, especially a will.

A will, sometimes called a last will and testament, spells out who receives your assets after you die. If your parent dies without one, the state decides who receives their house, car and other belongings.

In most states, assets are passed along to the next of kin, starting with the spouse, then children, parents, siblings and so on.

If your parent recently remarried, their spouse will likely inherit everything. This may or may not be what your parent wants. People often assume their children will get the house or the fishing boat, but if they’re still married and don’t have a will, that’s not the case.

Family dynamics are complex and dying without a will can unearth the ugliest side of human nature. It can leave loved ones confused and disappointed at best and locked in hostile litigation at worst.

It’s best to avoid the mess by having an open dialogue with your parents now.

First, ask if they even have a will. If they do, find out where it is and the last time it was updated.

You can create a simple will online, but most experts recommend having a lawyer draft one up. It may cost a few hundred dollars, but the money is well worth it, especially if your parent has multiple assets, owns a business, has a complex financial situation or has a blended family.

If changes need to be made to a will or an estate plan, go with your parents to an attorney and finalize any revisions. Don’t let your parent make the changes themselves by writing over their will or typing up a new one without getting it notarized. Doing so can invalidate the entire document.

Many states offer legal aid resources for the elderly or qualifying low-income individuals.

To save money, ask for estimates from lawyers and get quotes from a few different firms. Always make sure to take advantage of free consultations.

Ask About Power of Attorney and Living Wills, Too

A lawyer can also help you draft other important estate planning documents, including a power of attorney, advanced directive and a living will. These documents appoint someone to manage your parent’s affairs if they become incapacitated. They also describe the end-of-life health care your parent wants — or doesn’t want — to receive.

The Health Insurance Portability and Accountability Act (HIPAA) restricts who can have access to private health care information, so signing papers that allow you to access your parents’ health documents is important.

Keckler recommends having a power of attorney and living will on file at hospitals and doctor offices where your parents might go, as well as keeping copies for yourself.

Make Sure Beneficiary Designations are Up to Date

It’s also essential to ask your parents if they have any life insurance policies in place. Insurance can help pay for long-term care, final expenses and burial costs.

Things like life insurance policies, 401(k) accounts, annuities, pensions and brokerage accounts come with their own beneficiary designations. People often forget to update these documents over time, which can cause headaches, heartache and hardship after someone passes away.

For example, your father may still have his ex-wife listed as the beneficiary of his Roth IRA — even though they’ve been divorced for a decade.

Even if you’re listed as your dad’s primary beneficiary on his will, the IRA may still pass directly to his ex-wife.

Check to make sure these documents are up to date and contain your parents’ current wishes.

How to Start the Conversation

These conversations aren’t easy, but they don’t need to be divisive either. Making sure everyone feels valued and heard is key.

It’s important not to wait until something forces these issues to start the conversation.

Keckler suggests finding a natural catalyst to bring up the topic like:

• Saying you just had a meeting with your financial planner and think you should have one as a family.
• Talking about a friend who is dealing with a family crisis. Let your parents know you want to avoid that kind of strife by sitting down for an open dialogue about money and the future.
• Tell your parent that you recently set up a meeting with a lawyer to draft your own will. Ask if they’ve done any estate planning, and if so, what was the process like.
• Write your thoughts up in an email or letter ahead of time. People communicate differently. It might be easier to guide a conversation or describe how you feel if you write it down first and share it with your parents before you sit down to talk.

Before the actual conversation, figure out what your goals and priorities are. What should you talk about now and what can wait?

Other advice:

• Keep the conversation going: Schedule regular times to talk about these issues.
• Define roles and responsibilities: Each sibling might be able to help in different ways. Talking about expectations and roles can diffuse tension.
• Listen: Keep an open mind and be patient. Money is hard to talk about.

Involving an objective third-party is another way to break the ice. A financial planner can help facilitate the conversation because they have experience and know the most important topics to discuss.

“Families who have done this report it went better than they thought it would and they felt more financially confident,” Keckler said. “Overcoming your apprehensions and getting started is a great first step and you’ll be glad that you did.”