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Finances and aging parents: What to talk about, and how to do it

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The average person in the US now lives 78.8 years, with many living much longer.1 Your parents may seem much more youthful than your grandparents, but there may come a point when they’ll need help managing finances. The issues involved, though, can be tricky. You may not want to think about your parents losing their independence, or worse. They probably don’t enjoy these thoughts, either. For a number of reasons though, you should initiate dialog about money sooner rather than later.

Some tips about how to bring up the conversation, and knowledge about what information to cover, may be helpful:

  • 1

    Timing and wording should be carefully chosen.

    Your parents may be protective of their privacy and find it difficult to talk money with their kids. Some experts recommend backing into it by discussing a friend and their parents’ finances. While the conversation is necessary, don’t bring it up over Thanksgiving dinner and don’t aim at settling everything in one seating. Avoid putting your parents in a defensive position, but do be firm about needing information. Without it, you’ll find it much harder to help when it counts most.

  • 2

    Permissions and preferences need to be specified – ahead of time.

    All adults, especially those with dependents, should have a will. If you need to access your parent’s assets while they’re still alive, though, authorization is essential. Someone should be legally designated as having “durable power of attorney.” This trusted person has the power to make key decisions regarding your parents’ finances. If that’s you, make sure to let your siblings know about it and ensure they’re confident you are acting in your parent’s best interests. Once you have power of attorney, keep records of all transactions to avoid potential lawsuits.

    Your parents also need to elect a “health care proxy.” This simply means they’re choosing someone to make health and care decisions if they’re no longer capable. While it’s easy to decide who should have power of attorney and be the health care proxy when a person is able-minded, it can get complicated if they’re not. Don’t leave important care decisions up to people outside of your family.

  • 3

    Know the location of all important documents, and avoid the safety deposit box.

    There should be no doubt about where money is kept, how much is there, and who can access it. Make a list of each account number and contact information for the institutions, along with deeds, co-op agreements, car insurance records, and any other assets ­– in one place you can quickly access in an emergency.

    Older people commonly keep papers and valuables in a bank safety deposit box. This can be a big mistake. Apart from losing the key, you may not be able to obtain information from the bank unless you can present Power of Attorney documentation or a Death Certificate.2 These documents can be extremely time-consuming to obtain after the original safety deposit box owner passes away or becomes incapable of handling their own financial affairs.

  • 4

    You’ll need expert advice.

    Spending money on legal advice may be the last thing you want to do if your parents are of limited means. Knowledgeable advice, though, can be critical in assessing issues, making vital decisions, heading off potential conflicts, and putting paperwork in order. At a minimum, get the advice of a lawyer specialized in estate matters within your state, along with a qualified financial professional. Part of the conversation should be about what the future might hold for your parents. They may want to consider stable ways of producing income, such as annuities. You should also discuss who will care for your parents and how to pay for it. If you have power of attorney over your parents’ money, you have fiduciary responsibility. That means you’re legally obliged to put the financial interests of your parent first, ahead of your own interests.3  

Talking with your parents now will not only save you time, effort, and money, but most importantly, will let you tackle potential problems ahead of time. When everything’s in place, you can feel good that you took on the issues in time to make a big difference to your parents’ wellbeing as well as your own.

1 Larry Copeland, “Life Expectancy in the US hits a Record High,” Oct.19, 2014.

2 Tara Siegel Bernard, “Aging Parents and Children Should Talk About Finances,” New York Times, May 24, 2013.

3  Jeff D. Opdyke, “How to Talk to Your Parents About Money,” The Wall Street Journal, Aug. 2, 2011. 

This material is intended for general public use. By providing this material, Guardian is not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact a financial professional for guidance and information specific to your individual situation.