It’s an odd transitional family moment when the dynamic shifts between aging parent and adult child. The once doting caregiver who instilled you with life skills becomes the care recipient, as some of their life skills decline or their finances deplete. It’s the circle of life that we all must accept.
At some point, it is vital for the generations to come together to discuss money matters and estate planning. This can be a very awkward subject to bring up, as it is such an emotionally charged subject. However, whether it is parent or child that initiates the conversation, a conversation must be had – and preferably well before a crisis point that makes the situation more complicated.
Even a parent who has budgeted for a comfortable retirement can be blindsided by chronic illness, investment dips, the death of a spouse, or simply outliving the plan by a decade. Nobody wants to be a burden on their children, but the reality is most seniors eventually need some assistance with their financial, legal and care matters. Chances are it’s the adult children that will have to step in and step up, whether its contributing to their support or managing their bill paying.
We discussed the finer points of broaching this delicate subject in our post How to Chat With Your Aging Folks About Finances. This post focuses more on what to talk about when you have “the talk.” Just as you both had to brave the cringe-worthy waters of the puberty talk back in the day, now you must have the financial talk.
So on a practical level, what type of information do you need to glean from financial discussions with your aging parents?
Start by finding out about their various bills and how they pay for them. Are they writing monthly checks or using automatic bill pay? If they’re still old school, encourage them to set up automatic payments to make this chore easier for everyone.
If your folks are willing to share, try to get a handle on the following information:
- What are their sources of income
- Where do they bank and what kinds of accounts do they have
- What sources of debt do they have
- What kind of insurance policies do they have
- Where are the policies stored
- What kinds of investment accounts do they have
- What real estate do they own
- What are all their monthly bills that must be paid
- What are the names and contact details for any financial professionals they work with
Ideally, you should also have easy access to:
- Their social security numbers
- Their pertinent usernames and passwords
- A record of their medical conditions and history
Estate planning documents are most likely relevant to the family, so make sure you also discuss:
- Their will, which spells out who gets what when they die. If your parent dies without one, state law will determine how assets are distributed.
- Power of attorney, which allows a parent to name someone to make financial decisions for them if they can’t. This is perhaps the most critical document to get right, and details can vary by state.
- Advance directive, also known as a living will, which outlines what kind of end-of-life medical support they would or wouldn’t want. It is also where to name a health care proxy to make medical decisions on their behalf if they can’t.
It may seem like an invasion of privacy, but having all this information at your fingertips will be necessary if you ever find yourself becoming a caregiver for your aging parents. If your parents are reluctant to disclose the details to you at this time, ask them to at least prepare a list of accounts, policies and legal documents and let you know where to access it should there be an emergency.
One thing that can make compiling these kind of particulars more streamlined is something like the ICE Binder from Smart Money Mamas. This “In Case of Emergency” binder is a series of digital worksheets that walk one through documenting all the various aspects of their financial and legal life. It also includes a few sheets on emotional topics that someone might want to share with loved ones. Fill out the info, print out the pages, pop them in a binder and update them when necessary. All important details will be organized in one place for family to have at their fingertips in case something happens. It will save the people you love a lot of hassle during a difficult time if you can’t help yourself or when you are no longer here.