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September 29, 2020

How to Discuss Finances with Aging Parents

Growing up, many of us were taught by our parents to never talk
about money. The subject is viewed as being taboo, like discussing
your political or religious beliefs. Adult children who grew up
with this mindset typically feel uncomfortable broaching this
difficult subject with their aging parents.
By Eric Heckman

Growing up, many of us were taught by our parents to never talk about money. The subject is viewed as being taboo, like discussing your political or religious beliefs. Adult children who grew up with this mindset typically feel uncomfortable broaching this difficult subject with their aging parents. Many adults are in denial about their parents’ mortality and avoid asking questions about their estates and wills. Oftentimes they do not want to appear greedy about their inheritance or controlling of their parents’ personal matters. However, not discussing this vital issue can lead to significant and irreversible problems in the future.

Today we live in an age where planning ahead makes all the difference. The older generation who was taught to save every penny is now experiencing considerable wealth due to burgeoning real estate and smart investments. In turn, they need to preserve those assets to plan for future life changes.

Adult children can play an important role in making sure their parents’ estate is in order, as well as ensuring they are financially capable to take care of themselves for the remainder of their lives.

The American Health Care Association estimates that the cost of a nursing home can exceed $50,000 a year, while assisted-living facilities average $24,000 annually. If elderly parents are not prepared financially for that care, the burden may rest on their children. According to the 2001 “Retirement Reality Check” survey by Allstate Financial, one in six (16 percent) baby boomers currently assists elderly parents or in-laws financially.

The following tips should help to make that conversation easier and more productive.

1. Pick the right time to talk. You want to make sure to have the conversation when you won’t be interrupted and when everyone is relaxed.

2. Maintain a sensitive stance. Remember, this is a difficult subject for them to discuss. You may not agree with their decisions, but keep in mind they are competent adults. A good way to set the right tone is by saying, “It’s important for me to understand your finances in case I need to help you in the future.”

3. Involve an expert if needed. There are many resources available, such as financial planners and certified public accountants, that can help manage later life decisions and financial issues for families.

4. Make a list of assets and liabilities. This is an important place to begin once the conversation starts. You’ll want to note the date and cost of assets, as this information will be needed for tax purposes if any assets are sold.

5. Establish arrangements for financial management. Your parents will want to consider establishing a durable power of attorney.

6. Know where important documents are kept. Make a list of all important documents, including birth and marriage certificates, wills and trust agreements, Social Security records, burial instructions, insurance policies, bank and investment statements, mortgage and real estate deeds and auto ownership records.

7. Review estate planning and investments. If they haven’t done so already, encourage your parents to develop a plan to maximize their legacy for their heirs. Also be sure to discuss their investment strategy so you have an understanding of their financial well-being.

8. Understand your parents’ healthcare wishes. You’ll need to know where your parents stand on healthcare issues should they ever become incapacitated.

It’s difficult thinking of the possibility of needing care in our elder years – not only when thinking of parents, but also when thinking of ourselves. What is most important to think about is how to plan ahead to avoid disagreements over care and finances. The rewards are endless and the experience will help you prepare for your own future.

Eric Heckman is president of Heckman Financial & Ins. Services, Inc. and brings a wealth of knowledge and over 13 years of experience. Contact him at www.WealthCreator.com or 297-9800.

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