Discussing Finances With Aging Parents

October 18, 2024 | Blog

How to Speak to an Aging Parent About Finances

two people talking and pointing at a computer screen

Although it may seem uncomfortable, talking to your aging parents about finances and estate planning is vital—doing so allows you to be fully prepared to manage their financial situation if they become incapacitated or when they pass away.

While you most likely want to protect your parents’ assets and support their retirement plans, you don’t want them to feel you are trying to take away their independence. Learn how to tactfully approach a potentially difficult conversation, successfully plan for your parents’ future, and manage their finances.

Understanding the Importance of Financial Discussions

Even if your parents are still healthy and independent, being informed about financial and legal matters will be beneficial should you ever need to assist them with managing their money.

The Need for Financial Transparency

The financial realities associated with aging, death, or dying are unpleasant to think about, but delaying this conversation with your parents could be costly.

In the United States, the annual median cost for long-term care ranged from $24,700 to $116,800 in 2023, depending on the service. As they move through life’s transitions, older adults may eventually need services such as a nursing home or at-home care. Without adequate planning, many families are unable to pay for these costs out-of-pocket.

By having an open conversation with your parents about their financial status, you can plan for exactly how these expenses will be covered. Doing so also helps ensure your parents’ well-being is cared for in the future.

An additional benefit of gaining transparency into financial and medical matters is that in the event of an emergency, you have peace of mind that the necessary precautions and paperwork are in order.

Recognizing Aging Parent Needs

Along with planning ahead, you should consider your aging parents’ current financial needs. Older adults experience many challenges, such as feeling uncertain about financial decisions or confused by their bills and brokerage statements.

Additionally, older adults are more likely to fall victim to online scams. In 2023, about $3.4 billion in fraud losses were reported by those over 60. As your parents might not be aware of modern phishing tactics, they may not pick up on what you would view as an obvious scam.

Adult children can offer their mothers and fathers much-needed support while they navigate the complexities of aging. Whether your parents have admitted it or not, there is a possibility that they may need you to step in.

When to Begin Financial Conversations

It’s common for older adults to be reluctant to ask for help. Your parents may be concerned about losing their independence or fear they may be a burden. It can also be tricky for adult children to know when it’s appropriate to have a financial conversation with their parents.

These signs could mean your aging parents need assistance with their finances:

Strange purchases: Be aware if your parents purchase items out of character or suddenly participate in contests or sweepstakes.
Unopened piles of mail: This can be an indicator that your parents are behind on their bills.
Money complaints: This can range from hinting that they don’t have enough money to not participating in activities that they feel are too expensive.
Physical ailments: Arthritis and fading vision can make it difficult for your parents to perform tasks like driving to the bank.
Memory problems: These can range from not remembering whether a bill was paid to losing track of cash.

Strategies for Effective Communication

A combination of care, concern, and curiosity is most likely why you want to ask your parents about their finances and estate plans. No matter how good your intentions are, approach the subject delicately. Being kind and understanding can help reassure your parents that you aren’t prying or being greedy.

Building Trust and Empathy

Before starting any financial discussion with your parents, it is critical to consider their point of view. Doing so will help you empathize and ensure you are better equipped to tend to their needs and emotional responses.

In addition to having likely grieved the death of many friends and family, your aging parents may be mourning the loss of their physical abilities and independence. Many older adults view giving up their financial autonomy as being stripped of their freedom and losing control.

Your parents’ generation can also be relatively private about their finances, so it may be harder for them to open up. You can encourage them to trust you by showing that you are listening:

Ask follow-up questions.
Maintain eye contact.
Display positive body language, such as keeping your arms and legs uncrossed.

How to Have Financial Conversations With Aging Parents

Here are some tips for initiating the conversation about money:

Consider family dynamics: If you have siblings or other family members with whom your parents are close, determine who would be best suited to speak to your parents about this sensitive topic. Only appoint one person—a group discussion could make your parents feel attacked.
Go slow: Discussing your parents’ finances will likely be a series of ongoing conversations rather than a one-off. Initiate the conversation sooner rather than later, and give your parents time to process, as they might be taken aback.
Be considerate of timing: Be cautious of busy holidays or other times when all parties are likely to be stressed and distracted.
Begin with your reasoning: Start the conversation by clearly stating why you want to discuss their finances. Let them know that you have their best interests at heart or voice any concerns about their health or future plans.

Once you have broken the ice, maintaining a supportive dialogue while obtaining the necessary information is key. To do so, you should:

Be compassionate: Acknowledge that you know the conversation may be difficult for your parents to speak about. You could also find common ground by stating that discussing the topic is challenging for you, too.
Give them control: Assure your parents that you are not trying to control them—you want to help. Allow them to have a say in what they choose to address and when.
Ask about their wishes: Remind your parents that you want to know their retirement goals and how they envision their financial future—to do so, you need to understand their preferences. Now is the time to discuss their income plans, health care coverage, and whether they would eventually like help with activities of daily living (ADL). Involving your parents in the estate planning will also make them feel like they are still in charge.
Understand their finances: Gain insight into how much money they have, where they keep it, and who else has access to their funds. Review their tax returns and ask for their account numbers and contact details.
Be respectful: Some topics are off-limits—only ask appropriate questions. Steer clear of speaking about your potential inheritance, as this is insensitive.
Keep it short: Limit the conversations to 30 minutes at a time. Shorter discussions can help all parties stay focused and calm.

Financial Planning and Management for Aging Parents

After having multiple essential conversations about your parents’ finances, you can assemble an estate plan. You will also be in a suitable position to start managing their finances, whether necessary now or in a few years.

Estate Planning Essentials

Estate planning will allow your parents to make critical future decisions about health, medical treatments, and end-of-life choices while they are still able to. The planning process also gives them the power to determine what happens to their hard-earned assets.

When creating an estate plan with your parents, ask them the following questions:

What are your plans for long-term care?
Who would you like to provide this care?
Where do you want to live—in an assisted care facility or in the comfort of your home?
Who will be financially and medically responsible should either of you become incapacitated?
What are your plans for end-of-life matters?
How would you like your assets to be distributed?

Regardless of the specifics, various financial and legal documents should form the basis of your aging parents’ estate plan:

A will or trust: This will detail where your parents want their assets to go.
A letter of instruction: Though this is a non-legal document, it expresses your parents’ wishes and gives directions alongside their will or trust.
Any financial records: These should include a list of their financial accounts, debts and liabilities, company benefits, insurance, property, and taxes.
An advanced medical directive: This will include which treatments your parents have agreed to prolong their lives.
A durable power of attorney (POA): If your parents are incapacitated, this authorizes a person of your parents’ choosing to act on their behalf.

There are different kinds of POAs, such as durable and non-durable. You should ensure that your parents’ POA is durable, as this will take effect upon their incapacitation and remain effective until they pass away. With a financial POA, you can take over your parents’ bank account and perform actions ranging from making deposits and withdrawals to changing beneficiary designations.

For you to legally manage your parents’ estate, they must appoint you as their agent in their POA document. It is best to consult with a lawyer experienced in estate planning to assist you in drawing up this document. Additionally, for a POA to be valid, your parents must be of sound mind—they need to comprehend the impact of this decision. This requirement is one of the many reasons why having financial discussions with your parents while they are still healthy and competent is paramount.

Long-term Care Options

When planning your parents’ estate, being informed of the various long-term care options helps ensure that you can guide their decision. Together, you should assess which home care or companion services would best suit their needs and wants.

Home care encompasses a variety of services, one of which is companion care. Home care generally refers to non-medical services that can assist your aging parents with ADLs, such as maintaining personal hygiene, meal preparation, and light housekeeping. More specifically, companion caregivers enable older adults to age gracefully with at-home support and keep them company to prevent loneliness.

A care manager can also be beneficial as they comprehensively research their client’s care needs, offer constant assistance and support, and liaise with primary care physicians and other individuals involved. In addition to looking out for your parents’ well-being, care managers can significantly reduce stress and anxiety for you and your family. You can work together with a care manager to:

Discuss the future: If you would like help facilitating a difficult conversation about your parents’ finances, a care manager is an excellent individual to hire. They are experienced in encouraging open and frank discussions and handling resistance.
Organize finances: These professionals ensure you and any other trusted relatives know where all the necessary paperwork is and how to access your parents’ funds. They can also work with your aging parents to update long-term care insurance to help cover the cost of care.
Determine a living situation: Depending on your parents’ needs, such as having conditions like Alzheimer’s or being prone to falling, care managers can recommend modifications to make the home safer or help with the move to an assisted living facility.

Navigating Caregiving and Financial Requirements

Now that you know the care your parents want or the level of care that is needed, you must research the costs involved and determine whether their financial resources are sufficient.

While adult children want to do their best to ensure their parents are well looked after, the associated expenses can be a limitation. If this is the case, here are some possible avenues you can explore:

Future planning: If you predict that your parents will only need care in a couple of years, you could meet with a financial planner to help create a plan to enable your parents to afford care should they need it.
Financial aid: Government programs like Veterans Assistance or nonprofit organizations may be able to help. Your parents could be eligible for benefits or subsidies.
Insurance: Though premiums can be pricey, long-term care insurance can be a worthwhile investment if you expect a significant level of care to be necessary. You can also work with your parents to review current insurance and determine whether they qualify for Medicare or Medicaid.
Siblings or relatives: If you are considering contributing out-of-pocket, share the financial responsibility with others to lighten the financial load and emotional toll.

How to Monitor and Assist With Finances

With all the necessary planning in place, you can take action. Once the time comes for you to step in, here are some steps you can take when managing your aging parents’ finances:

Make small changes: Rather than hastily jumping in, gradually increase your support and only do so when needed. This approach gives all parties time to get used to the new normal.
Keep all documents in one location: After making a list of all financial and legal documents and gaining access to where these are stored, move everything to a safe place.
Streamline financial tasks: Switch your parents’ income streams, such as retirement or savings, over to direct deposit—if they cannot make a deposit or forget to do so, the money will still find its way to their accounts. You can also set up automatic bill payments and consolidate credit card accounts.
Communicate often: Keep your parents, siblings, and other relatives updated. Your family members can be a big help, and transparent communication can decrease the likelihood of a misunderstanding.
Maintain separate finances: While it might seem like a good idea, be cautious of combining accounts. You need to know what resources are available and use them appropriately—using your own funds to support your parents can be problematic.
Get professional help: Lean on experts, such as care managers, financial planners, or attorneys, to assist you. Such professionals can lighten the burden and help you make the most suitable decisions for your parents’ situation.

Contact Corewood Care for Support

Though life’s changes can be challenging, proactive financial and estate planning discussions are vital for your parents’ future well-being. If you want to hire a care manager to facilitate a financial conversation, Corewood Care is here to support you and your family. Our care managers are trained healthcare experts who can help you find solutions and offer guidance in making informed decisions, including which of our long-term care services would be best.

We provide home care and care management services throughout Maryland, Washington D.C., and Northern Virginia. Whatever option you decide on, from 24-hour home care or companion care to Alzheimer’s care services, our caregivers are committed to enabling your parents to age gracefully. We believe in providing the same care we would want for our family.