By: Venessa Worthington
Whatever age your parents are, it’s never too soon to begin talking with them about their finances. You want to be sure your parents are well taken care of, so it’s vital to check in with them on their money situation. Here are six ways to help your elderly parents with their finances.
1. Start Financial Conversations
There’s no question finances are an awkward topic for anyone to discuss, and especially with your parents. Your parents raised you, so of course they’re used to handling things themselves.
The best thing you can do for your elderly parents — and for yourself — is to begin having these difficult conversations. Even if your parents seem young and spry, it won’t always be that way. The fact is as parents age, it will likely become more difficult for them to manage all facets of their lives, including the financial ones, on their own.
None of us is guaranteed tomorrow. That’s why it’s essential to begin discussing finances with your parents so that you can help them take important steps to protect their assets and know their wishes will be carried out.
2. Discuss Important Financial Documents
There are important legal documents your parents should put in place while they’re mentally capable. A will is important, but it’s not the only valuable document your parents should have completed and accessible. They also may wish to name a power of attorney and create a living will. In addition, basic data about their bank and retirement accounts will be essential in case you need to take over their bills.
It’s a good idea to check on whether your parents have a document on file that lists all their current checking, savings, and retirement accounts, as well as any insurance policies and other important financial accounts. They need to include passwords as well. If they don’t wish to make this information available to you right now, they can still let you (or another sibling) know how to access these accounts and under which circumstances they would allow this.
If your parents are incapacitated due to dementia, illness, surgery or injury, someone will need to step in and handle their finances. Without proper legal documents in place, you could face months of legal headaches as you try to pay their bills without having access to their accounts.
Some of the financial paperwork you’ll want to organize for your parents may include home property deeds, bank records and statements, receipts, debt information, Social Security cards, and recent tax returns.
3. Discuss a Power of Attorney
One of the important conversations you’ll want to have with your parents is whether they’ve named a power of attorney. A power of attorney (POA) is a legal document enabling someone to make decisions for you in the event of incapacity. Your parents need to name someone to fill this role, whether it’s you or another trusted adult.
It may be hard to imagine the need for a POA if your parents are currently physically and mentally strong, but the time may come when they can no longer safely make decisions on their own. If this happens, having a POA in place can save you a lot of trouble when you need to take over the finances and health decisions for them.
You may have your parents meet with a lawyer to arrange this document, or there are online services you may use. Be sure to look into both a medical and a financial power of attorney.
4. Discuss Insurance and Medical Issues
You must also talk with your elderly parents about their health care needs and insurance policies.
It’s good to check that your parents’ insurance premiums are paid on time and make sure they have adequate health care provisions in place.
Discuss whether or not they may need to get long-term care insurance, which helps offset the costs of care in a nursing home or assisted living facility. The median cost for a year in a nursing home in the U.S. was $85,800 in 2018.
Is it possible that they might move in with you or another family member should the need arise? Talk through the potential scenarios, and be sure everyone has the same expectations. Discuss these possibilities as you help your parents decide if long-term care insurance is best for them.
You’ll want to secure HIPAA (Health Information Portability and Accountability Act) authorization. This enables you to receive key information about your parents’ medical status.
Another important topic is whether they have an advance health care directive, sometimes called a living will. If and when a parent is in dire medical condition, this document spells out their wishes clearly so you don’t have to agonize over what they would have wanted. This might include whether or not they want resuscitation, life support, or breathing tubes.
5. Take Over Their Finances If Needed
Many of these steps may be done simultaneously. As you ask the previous questions, you’ll likely discover whether your parents are ready for you to take over their finances. They may be perfectly fine paying their bills right now, but it’s kind to let them know you’re willing to help them or take the task over entirely — either now or down the road.
If their mental capacity appears to be slowing, it’s important to pay attention and step in to help. You might take over their utility payments, handle their credit cards, check on their retirement accounts, and more. If you have power of attorney, that will be helpful. It’s better to at least know where the documents are and how to access funds before your parents lose the ability to appoint someone to oversee their finances.
6. Assist With Estate Planning
Estate planning is a key way to help your elderly parents. You can reassure your parents that when you bring up these sensitive topics, you’re not angling to get their money. Instead, you’re a guide to help them and ensure their wishes will be carried out.
If your parents don’t have any sort of will yet, it’s time to get that done. If they already have a will, you want to check that it’s up to date in case it was drawn up decades ago and important factors have changed.
Your parents will want to assign beneficiaries for all of their assets, including money, property, and valuables. If they want to give charitable donations upon their death to a certain organization, that should be included as well.
You can assist your parents by making an appointment with legal counsel to draw up the appropriate estate planning documents. Let them know you want to follow their wishes. This will give them, as well as you and other loved ones, peace of mind and will hopefully prevent any legal battles when your parents are gone.
Giving Peace of Mind
We all want to be sure our loved ones are well cared for, and these steps can help you do so for your parents as they grow older. Tackling these tough financial topics sooner rather than later will give everyone peace of mind.
Venessa Worthington is a freelance journalist in Washington state. She has four young children and her parents are in their 70s, and she’s been wading through helping them with their financial issues in their retirement.