How to Talk About Money with Your Aging Parents

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Balancing family and finances is a tricky endeavor, and when it comes to talking about money with aging parents, years of ingrained communication habits and family dynamics often get in the way.

Money is understandably a sensitive topic for both parties. Parents and other elderly relatives can often be tight-lipped because they aren’t used to letting their children take the lead on these kinds of family duties. Adult children are also sensitive when it comes to questioning their parents about money because they don’t want to come off as inquiring about their future inheritance. However, using a respectful and tactful tone with aging parents may make necessary financial conversations easier.

Many people wait too long to have important conversations with their parents about money. Even if your parents seem physically and financially stable, you may want to initiate a dialogue about finances so that you adequately understand their elder care and financial preferences. Once an aging parent becomes sick or needs care for other reasons, having a discussion about money, life insurance and other sensitive topics can be even more challenging.

1. Talk about your finances, but keep it conversational

To put parents at ease, consider discussing your own financial planning. For example, try mentioning a recent visit to a financial planner and the methods you are using to manage your own money. Talking about yourself can help you ease into a conversation with your parents about how they’re handling their own finances. This approach also makes the discussion friendlier and less like an interrogation. If one adult child in the family is more financially responsible than the other siblings, it can be good for that child to take the lead because the parents may be more comfortable talking money with them.

2. Take inventory of any assets, and determine the location of all important documents

There are billions of dollars in unclaimed property throughout the United States, including unredeemed savings bonds, uncashed Social Security and retirement checks, and IRS refunds. There are also billions of dollars worth of uncollected life insurance payments because, in some instances, heirs don’t know about a policy when the parent passes away, so that money is never claimed.

To avoid this scenario in your family, it’s important to know which policies and other documents exist and where your parents keep them. These records may include:

• Marriage certificates
• Birth certificates
• Each parent’s will
• Powers of attorney and other health care proxies
• Living wills
• Financial account information
• Tax returns
• Details about the existence and location of safe deposit boxes
• Military records
• Titles to property
• Health and supplemental insurance documentation
• Life insurance and any other insurance policies
• Information about all prescriptions and medications
• Banking records
• Trust documents

3. Review documents to make sure existing powers of attorney or living wills are current

Estate planning can be an uncomfortable topic for families, but it’s wise to hash out details before a loved one passes away. Knowing your parents’ end-of-life wishes well in advance of their passing can help reduce family stress during an already difficult time.

Make sure your parents’ living wills and any existing powers of attorney are up to date and reflect their current wishes. It’s also important to review any life insurance policies to make sure the coverage is sufficient to pay for funeral expenses, estate taxes, a mortgage and any auto loans or other debts that might be left behind. Additionally, you should determine whether the life insurance policies can replace income with a nontaxable death benefit.

4. Gently ask whether your parents need help with credit cards, utility bills or other expenses

Although it can be uncomfortable to ask your parents if they’re struggling financially, this is an important part of the conversation. Over 25 million Americans age 60+ are financially insecure, according to the National Council on Aging. They live with significant credit card or housing debt, struggle to keep up with bills and may even have trouble affording needed medication or groceries. If your parents or older relatives fall into this category, it’s important to understand the ways in which they’re struggling financially so that you may either provide aid or direct them to an organization that can help.

One useful resource is BenefitsCheckUp. Run by the National Council on Aging, this website offers assistance for those who need help paying for medications, health care, food and utilities. Sit with your parents to discuss their needs and use this resource to look for help.

5. Create a list of important names, phone numbers and email addresses to be used in an emergency

During the conversation, it’s a good idea to touch base with your parents about any important personal information they use to manage their finances. Carefully document this information, which may include:

• Financial advisors
• Life insurance agents
• Attorneys
• Doctors
• Executors of their wills
• Family members

In addition to relying on these important contacts for guidance, an elder law attorney can help with the legal concerns that are unique to seniors.

6. Include all family members in the discussion and determine whether both the parents and the children are handling their respective investments properly

Parents may take steps to ensure that their children are prepared to handle their investments wisely after the parents’ death, especially if the estate includes sizable assets. Conversely, it may be important for children to examine the investments of their aging parents to make sure they aren’t taking unnecessary risks.

Finally, it’s critical not to leave either parent in the dark. If one spouse passes away, it can be very overwhelming for the surviving spouse because in many relationships one person takes the lead regarding financial planning. That common dynamic is another good reason to talk about money before either parent passes.

Having financial discussions with aging parents can pile tough emotions onto an already difficult set of topics. However, determining what both parties need out of the exchange and then working together to plan for the future can help prevent stress and confusion for the whole family — both today and down the road.