Speaking with your parents about their financial future isn’t an easy thing to do. However, a bit of planning and candid conversation will prevent unnecessary complications if someone needs to step in to manage their affairs.
A Cautionary Tale About Legal and Financial Planning for Elderly Parents
A colleague at work, whom I will call Beverly, lost her father a few years ago, and the family struggled mightily to handle her parents’ financial affairs. Sadly, Beverly has a terrible story to tell.
Beverly’s parents—both in their eighties—lived independently in their longtime home, and various family members stayed with them periodically as well. Beverly’s mother showed signs of dementia and her father was wheelchair bound, but they insisted that they would not leave their beloved home. Moreover, her father was a private, strong-minded man and shared no information about his finances with his children. Of course, Beverly and her siblings never felt comfortable pressing him for it.
One day, a pan was left unattended on a stove burner. The result was a devastating house fire. Beverly’s mother and a visitor escaped, but her father fell down and was not rescued until he was severely burned. He never regained full consciousness and died of his wounds a few weeks later.
The day after the fire, Beverly and her siblings went to look at their parents’ home. What was left was little more than ashes. All paperwork had burned up and the computer had melted. There was no documentation concerning insurance policies, bank accounts or any property they owned. Beverly’s mother, whose trauma and grief exacerbated her dementia, could provide no helpful information. The adult children were tasked with somehow figuring out everything about their parents’ income, benefits, assets, insurance policies and legal preparations. Months later, they had made some progress, but matters were still far from settled.
The Importance of Discussing Finances With Aging Parents
Like Beverly, you may feel uncomfortable asking your parents or other loved ones in your care about the details of their financial situation. It’s easy to keep putting off this difficult conversation, but doing so benefits no one. When aging parents keep this information to themselves and fail to plan for the future, they make it incredibly hard for their adult children or other family members who might need to step in and manage their affairs. Bills may go unpaid, assets may be lost or overlooked, and legal guardianship may be necessary to obtain access to their accounts and make decisions on their behalf.
The 2020 Alzheimer’s Disease Facts and Figures report published by the Alzheimer’s Association estimates that 5.8 million Americans age 65 and over were living with Alzheimer’s disease in 2020. By 2050, this number is projected to reach 13.8 million. It is worth noting that neither of these figures includes seniors who have other forms of dementia, such as Lewy body dementia or frontotemporal dementia. Like Beverly’s dad, people can also suffer serious injuries that suddenly render them incapable of making decisions for themselves. Everyone (regardless of age) should prepare for the possibility of becoming temporarily or permanently unable to make decisions about their own health and finances.
How to Have a Conversation About a Parent’s Financial Future
Money is a sensitive topic for many people, and adult children typically aren’t keen on asking their parents for details about their income, assets and investments “just in case.” If you aren’t prepared for this discussion, it’s easy for concern and curiosity to be misinterpreted as insensitive or even self-interested.
Do some reading beforehand to learn how to discuss money with your parents. Keep in mind that it may take a couple tries for Mom and Dad to get comfortable with the idea and have a candid conversation about legal and financial planning. Once you’ve made some progress, use this checklist to guide your conversation and ensure you cover all the basic aspects of a solid plan for the future: 10 Things You Should Know About Your Elderly Parent’s Finances.
Make sure that you understand what your parents want, they have made the appropriate legal preparations, and whoever they have designated to handle their affairs is willing and able to carry out their wishes. Should their circumstances change, your family will surely appreciate clear guidance at such a difficult time. Having these instructions will also help prevent discord when emotions are already running high.
Even if your loved one is reluctant to talk, gently press them to do so. Beverly would have suffered a tragedy no matter what when her parents’ house burned down and her father was fatally injured. However, it would have been much easier for her and her siblings to handle the aftermath and care for her frail mother if they had had the financial information and legal documents they needed.