This is the second in a series of three articles on having discussions with family about money and finance — addressing the impact on family, helping each other, and role in leaving a legacy. The first two sections provide guidance for adult children in how we can help our aging parents. The final section will cover how to discuss money with the next generation, starting at an early age and running through adulthood. Here you can view The Money Talk Part I: Helping Mom and Dad.
In the first part of the series, we acknowledged that financial conversations can be difficult and questioned why, in our American culture, we avoid talking about money. For many, money conversations are so difficult that they just don’t happen frequently enough to always know when to offer help to a family member in need. Nearly one-third of children end up helping parents financially; the sooner we know that possibility exists in our own family, the more time we have to develop solutions together.
Moreover, age-related health declines pose challenges with living arrangements and the health care safety net. In our first article, we provided tips on starting the conversation around managing life in general and ways to safely offer help without appearing to be prying or meddling about finances. At the right time, asking parents how they want you to help — should they become incapacitated or die — can be very revealing about how well they have set themselves up for independence. This may also reveal that they are already counting on you for help and just have not discussed it with you (yet)!
Uncovering Their Needs
Beyond offering help annually with parents’ Medicare decisions after reaching age 65, open enrollment happens every year around the holidays. You can offer broad support in other ways that may indirectly uncover a need for help:
- Encourage your involvement in any BIG decisions such as major purchases or changes in living or health care arrangements.
- Offer to be their advocate and join them at meetings with their doctors, lawyers, accountants, financial advisors, insurance agents, etc. At the very least, get their permission to provide each professional your contact information so you can be considered a trusted contact in the event the professional notices something of concern.
- Have an annual meeting for tax preparation by helping them gather information.
- Offer to help pay their bills or supervise a bill paying service. Missed payments can be costly, and cause default or cancellations of critical insurance, mortgages, and credit cards.
- Set up an online security system with stored passwords and shared access with you. Login and password information is critical for your ability to help them in the event of memory loss or computer disaster.
- Ensure they have updated wills (that reflect their current wealth complexity and family make-up), trusts, powers of attorney, and healthcare directives prepared by an experienced attorney. Ask for a copy of those documents. Be sensitive to their freedom of choice but offer to discuss any appointments of executors, trustees, etc. that are of concern to you.
- If other family members are appointed in estate documents or are expected to be part of the estate or trust team, encourage your parents to discuss with each of you what they want you to do upon their incapacity or death so that you all hear it directly from them in their own words. A family meeting for this purpose would be beneficial.
- If there are current trusts or trusts to be formed under their wills, offer to act as trustee, co-trustee, or coordinate use of a corporate trustee to benefit from the professional trust services needed to properly administer a trust.
- Simplify! If you notice too many bank or investment accounts, credit cards, etc., offer to help consolidate them to make life easier.
- Encourage parents to think about legacy. What message do they want to send with the act of leaving assets to their heirs? How can you help them make sure that is communicated? Who should get what personal property and why? What final funeral or memorial service details are important to them?
- Set up a medical emergency plan for what happens if there is an injury or illness, especially if they live alone. Who does what to get them safely to a doctor or hospital?
- Discuss preferences for alternative living arrangements with continuing care and companionship if it appears that independent living may not remain sustainable, even with your help.
- If serious issues arise or are uncovered, consider elder care service providers to provide some expert guidance or services. These are available through county-area agencies on aging as well as privately through elder care attorneys or other providers.
- If you discover they do not have enough money but they have a home, consider a reverse mortgage or other refinancing options. First, consult their financial advisor or yours.
- If they do not have enough money and do not have a home, call your financial advisor to begin working out a plan together with your parents.
Aging and health declines are one of life’s realities where we often need to help each other. Even with a close family member, these can be challenging and deeply personal topics to discuss. Implementing some of these suggestions will help demonstrate your care and concern. A proactive and positive approach will go a long way to reduce the stress, and your JFS financial advisors are here to support you.
In The Money Talk: Part III, we will turn our focus to children and young adults. Financial literacy, especially among children and youth, is a great need in our society. As the world seems to be pushing the need for greater personal responsibility, it is up to parents to set the tone around earning, saving, spending, and donating. Money culture is learned at home, so we’ll provide suggestions and guidance on teaching a solid foundation for your children’s future relationship with money.
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As Managing Principal and Senior Lead Advisor, Thomas Alvaré, CPA/PFS works with our team of financial advisors to help clients develop, implement, and monitor tailored financial solutions. Tom’s ability to understand his clients’ planning needs, evaluate potential options, and clearly explain alternative solutions helps his clients work toward achieving their financial goals. If you have questions regarding this or other financial planning topics, contact Tom directly at email@example.com.