Aging Parents & Their Finances
There is a good chance our elderly parents are going to need our assistance at some point. Although physical care is a big part of that, it’s more than likely that care will extend to their finances as well. That is why it is important to communicate about your parent’s finances in advance. Addressing this issue while they are still healthy can make things easier on everyone involved. In addition, it can help ensure financial matters don’t slip through the cracks.
Talking to your parents about the details of their finances is likely to be one of the biggest hurdles you face as you care for your parents, especially if they aren’t ones to share their personal information in the first place. Parents may feel threatened or feel like they are losing control if they share details about their financial lives. Therefore, it’s important to broach this subject with concern and respect.
Think about who should start the conversation with your parents. Consider who they are more likely to respond to on the topic of finances without feeling threatened. In addition, consider whether or not this should be brought up to one of your parents first so they can have a talk with the other. Or perhaps it’s best to address both parents at the same time.
Once you are collaborating with your parents on their finances, organize the information. This would entail creating a list of income and expenses so you are aware of what is normally coming in and going out. Beyond that you would create a financial statement listing assets and liabilities. This is where you would record information on such things as all bank and investment accounts, savings bonds, annuities, business ownership, real estate holdings, vehicles and any debts. This is a great place to record whether or not your parents have a safety deposit box as well. If your parents are reluctant to share actual account balances with you, simply having a list that these things exist and where the accounts are will go a long way if/when you need to step in.
In addition, keep a list of any insurance policies your parents have. These would include life insurance (with beneficiary information), as well as homeowner’s, auto, long term care and any other policies they may have. Make note of where the actual policies are kept.
Finally, find out if your parents have estate documents. Most of the time these consist of a will, general durable power of attorney and advanced health care directives (health care representation and living will). There are many advantages to having these documents, so if your parents don’t have them, encourage them to meet with an estate planning attorney and get them. If your parents already have them, find out where these documents are kept as well.
As a financial planner, I’m used to getting intimate details about a person’s finances, however I know most people keep that information close to the vest. Although there’s generally no need to share your financial situation with friends and family, when you take on the role as caregiver or care manager, it’s much better to know this information in advance rather than trying to piece it together during a crisis.
Juli Erhart-Graves, CFP®
President
Worley Erhart-Graves Financial Advisors, Inc.
Juli Erhart-Graves is a CERTIFIED FINANCIAL PLANNER™ practitioner with Worley Erhart-Graves Financial Advisors, Inc. Worley Erhart-Graves Financial Advisors, Inc. is a Registered Investment Advisor. Registration as an investment advisor does not constitute an endorsement of the firm by securities regulators nor does it indicate that the advisor has attained a particular level of skill or ability. Content is for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
