Aging Parents and Their Finances: A Delicate Discussion
Some ground rules for your talk and a list of items to get started
Death and money — two topics many families try to avoid altogether — are a crucial discussion for aging parents and their adult (often middle-aged or older) children.
So buckle up. Neither side wants to contemplate the parents’ mortality. And discussing the parents’ finances — how they’ll be managed should the oldsters become unable, how property will be distributed when the parents die — is also touchy territory.
Of course, not discussing these issues is the bigger mistake. It’s likely your aging mom and dad will need help with their affairs at some point, and waiting until their memory begins to fail will be a frustrating experience for all parties. There’s also the danger of elder financial abuse scams. And it’s important to have trustworthy adult children keep an eye on their parents’ money coming and going.
My colleague Carla Fried has written about the essential documents to have in order as the years pass, and I suggest you read her advice here: https://www.rate.com/research/news/dies-family-documents
Carla has also organized advice for widows and widowers into two parts: one about matters of some urgency after the death of a spouse, and another about the longer term issues of a later life lived alone. You can read them here: https://www.rate.com/research/news/financial-checklist-widows-part-one and here: https://www.rate.com/research/news/widow-checklist-part-two
The aim of this column is to get aging parents and their adult children discussing death and money.
First, who ought to bring it up? Ideally the older generation. An invitation to your adult children to become more involved in your affairs is a gracious and kind way to put everyone at ease. Your adult children are probably reluctant to bring it up, fearing you’ll feel insulted or hassled.
Perhaps don’t spring the topic on them over Sunday brunch. If you can, plan a family meeting specifically to discuss this issue, and, if you’re able, arrive with a packet of information and instructions on your wishes for when the time comes for your child to manage your needs.
Of course, not every aging parent will introduce the topic, and a conscientious adult child will, at the appropriate time, bring it up. Either way, here are some items that ought to be in the parents’ information packet, or on the adult kids’ list of questions:
Bank accounts. Bank names, account numbers and beneficiaries, as well as the primary branch where you bank, if applicable. To the degree you trust your child, and to the degree you want assistance with routine banking needs, consider putting your child’s name on the account and giving them online access. But do so cautiously. Those most likely to abuse senior citizens financially are family members.
Investment accounts. Brokerage and financial-planning firms, with your broker’s or planner’s name and contact information; account information and beneficiaries; any stock-purchase plans you’re part of through your employer. Again, consider giving a trusted child some form of access to the account so they can monitor for shady trading activity and inappropriate investments, which are all too common in Wall Street’s dealings with senior citizens.
Insurance policies. Insurance company, agent’s name and contact; beneficiaries; and policy numbers for term life, whole life, annuity and long-term care policies you might own.
Health insurance: Policy number, contact information and plan coverage. An introduction to your primary care physician and instructions to communicate openly with an adult child can be helpful, too.
Pension: If you have one, employee number, H.R. department contact, direct-deposit information (if not mailed to your home) and life, health or other insurance benefits you might receive through the company.
House deed or mortgage or reverse mortgage: Location of deed or lender, account number, term and remaining balance.
Auto title or loan: Location of title or name of lender, term and balance remaining.
Utilities: Account number. And it likely makes sense to include your child’s name on the account in some fashion, though not as the responsible party. If utility services must be changed or terminated, being associated with the account will help your child manage this process, particularly in terms of reclaiming any security deposits for your estate.
To the adult children: Listen as the parents describe these items, even if you find the conversation meandering. Try not to interrupt. The respect you show in this initial discussion will indicate your willingness to respect your parents’ wishes.
The idea isn’t to jump in and manage their affairs as you would your own. Rather, your job is to help them manage their affairs as they see fit, doing what’s needed to protect their interests.