How to Talk to Your Parents about Finances
There comes a time when even the most independent of parents will need to start relying on their children, especially when it comes to money. Here are a few signs that you may need to get involved in your parents’ financial dealings, even if it’s uncomfortable to do so:
If they can no longer handle day-to-day details of balancing their budget.
If they have begun making very large purchases or withdrawing large sums of cash.
If they express grandiose thoughts of spending money.
If they are reluctant to spend money, even to meet their bare necessities.
If they begin writing more checks than usual.
If they begin to open and close multiple accounts.
If they stop meeting long-term obligations or neglect payment of bills.
If your parents are exhibiting more than one of these behaviors, it is important for their financial security that you step in.
How to Approach Your Parents
Control is a big deal — no one likes to give it up, especially those who have been taking care of themselves for decades. In fact, the feeling of losing control over their finances can cause parents to lash out and respond with anger. One strategy to avoid this is by appealing to their desire to help and protect you. You can ask them for tips and guidance on your own financial planning, opening a discussion about how they have set things up in their own lives. Touch on long-term care and ask if they’ve set money aside in savings for this or if they have a long-term care insurance policy, instead. Sometimes the best route to take is involving a third party. Parents can have a very difficult time opening up to their children about sensitive matters, especially if things have not gone according to plan financially. Using a financial planner, tax advisor, or elder law attorney can remove their feelings of damaged pride or worries that you might think less of them.
Organizing Your Parents’ Finances
When the time comes to get everything in order for them, you will need a lot of information and paperwork. This includes:
Sources of retirement income. If they don’t have records readily available, you may need to check the mail or their online bank accounts to determine what they have coming in through investments, retirement plans, Social Security, etc.
Residential preference. Your parents may want to live in the family house forever, but it is likely they will not be able to remain independent indefinitely. If one or both of them becomes ill, they may need 24-hour care that you may not be able to provide. This means you will need to know what they can afford and where they would prefer to stay.
Last will and testament. Make sure your parents have an updated will so that their surviving loved ones do not end up in a legal battle upon their passing. The best way to make sure things are done according to their wishes is to have them put it in their will, not rely on spoken agreements.
Durable power of attorney. The legal authorization to take over your parents’ finances and make decisions on their behalf is an important matter to have settled. You will also need to determine who will have durable power of attorney for healthcare to make healthcare-related decisions for them.
Living will.This is similar to a durable power of attorney for healthcare, but is also a reflection of the direct wishes of the incapacitated person, such as if they would prefer not to be resuscitated or their preferred life-saving measures.
Funeral arrangements. Your parents may have already sorted out some of these issues, such as where they would prefer to be buried or have their ashes spread, but seniors often forget to tell their children about this. It may seem morbid, but it is important to know their wishes beforehand.
Updated beneficiary forms. Your parents will need up-to-date beneficiaries for everything from insurance policies to insurance payouts.
Plan for estate taxes. The larger the estate, the more prudent it may be to seek advice from an estate attorney or financial advisor.
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This newsletter was prepared by Integrated Concepts Group, Inc. The opinions expressed in this newsletter are for general information only and are not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. The views expressed are those of the author and may not necessarily reflect those held by PlanMember Securities Corporation. Material presented is believed to be from a reliable sources and PSEC makes no representation as to it accuracy or completeness.