It’s hard to watch your parents age — after all, you’re used to them taking care of you. When the tables turn, however, it’s important to consider how you’ll bring up certain financial conversations (and know exactly what to talk about).
If you feel nervous talking to your parents about their money, you’re not alone. In fact, 19% of Americans in one survey said they feel afraid to broach financial conversations with aging parents.
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You may feel like you don’t need to have a conversation about your parents’ finances because your parents are still healthy. However, that’s precisely when you should broach the topic. You don’t want to wait until your parents start to experience health declines and you’re forced to make decisions on the fly.
Financial Conversations to Have with Your Parents
Let’s take a look at a few types of conversations you may want to have with your parents. Note that you don’t have to start with these exact sentences, nor do you have to have all of these conversations all at once. Feel free to break them up into different days or even over the course of several months.
Conversation 1: “Let’s talk about where you keep your money.”
Understand the whereabouts of all your parents’ financial accounts. Learn more about your parents’ brokerage accounts, checking accounts, savings accounts and more. Know how much money is in all the accounts and who has access to it. Keep a record of all account numbers and login or contact details for each account.
Conversation 2: “Can you show me the titles to your property, mortgage information and insurance policies?”
Once your parents show you copies of all real estate documents, such as deeds, titles, lease agreements and tax bills, make a copy of them all. Write down any contact information for brokers, real estate agents and attorneys your parents have worked with. Get the name of your parents’ homeowners insurance company and any other applicable insurance companies.
Conversation 3: “Let’s talk about debt.”
Talking about debt can get really touchy, and you may want to approach the topic delicately. Your retired parents may find it difficult to manage their finances without regular income coming in. You may need to dive into budgeting tactics with your parents if you get a sense that they may have trouble organizing their finances.
If you feel that their debt load has reached a level that they can’t handle on their own, you may want to help them tap into credit counseling and/or debt management services. Seek reputable financial professionals to weed out scammers.
Tip: Help your parents sign up for Personal Capital’s free financial tools. They’ll be able to see all of their accounts in one place, monitor their spending, and keep an eye on their investments. Personal Capital clients can take advantage of the Smart Withdrawal tool, which helps you determine the best order for withdrawing money in retirement.
Conversation 4: “Can you tell me where you keep your tax returns?”
You may find it helpful to review your parents’ tax returns to look for any additional income sources. Note that when your last surviving parent dies, the executor of your parents’ estate will also need to file a tax return and report income up until the date of death. All credits and deductions to which your family member was entitled may be claimed, according to the IRS.
Get the name of your parents’ accountant so you know who handles their tax returns if they don’t file taxes on their own.
Conversation 5: “Do you have a safe deposit box at the bank?”
Find out whether your parents have a safe deposit box at a local bank. Ask them what it contains and where you can find the key if you need to get into it.
You may even want to consider moving the contents of your parents’ safe deposit box to another safe location if you don’t think they (or you!) can keep track of the keys.
Conversation 6: “Do you have a life insurance policy?”
You may want to tread lightly on this topic as well because you don’t want to appear as if you’re probing for information about whether you’re listed as a beneficiary on your parents’ life insurance policy.
You can approach it from the standpoint that you want to know more about their wishes — tell them that you want to uphold the life insurance policy that they purchased years ago.
Get the name of the life insurance company. Ultimately, you should get the contact information, phone and email addresses for any professional your parents work with, including their financial advisors, attorney, life insurance agent and other professionals they use.
Conversation 7: “Let’s talk about future plans, like long-term care.”
Those turning 65 today have almost a 70% chance of needing some type of long-term care. Furthermore, 20% of people will need it for longer than five years, according to LongTermCare.gov.
It’s a good idea to find out if your parents have a long-term care insurance policy, particularly because of the costs. It can cost over $100,000 per year for a private room in a nursing home.
A survey by Fidelity found that 72% of parents expect their children to assume long-term caregiver responsibilities if needed. However, 40% of the children identified through the survey as filling this role weren’t clued into their parents’ plans. Talking through this delicate topic will clarify expectations and help you create a plan for your family’s future.
Conversation 8: “Do you have a will?”
Your parents need a will if they haven’t yet gotten one drafted. Probate involves proving that your will is legally valid and executes your parent’s instructions. If your parents have a last will and testament, it makes the probate process easier on you. If your parents die without a will, the probate court relies on your state’s intestate law to figure out how to distribute your parents’ things.
Help your parents draft a will if they don’t already have one. Take a comprehensive view of your parents’ assets, including real estate, and where it will go after they die.
Learn More: 5 Essential Estate Planning Documents
How to Have These Conversations
Journalist Cameron Huddleston acknowledges that it isn’t easy to have these conversations. She wrote a book, “Mom and Dad, We Need to Talk,” about dealing with the discomfort that you can encounter when talking to aging parents about important financial concerns. The idea stemmed from her own experience of raising kids while taking care of her mom, who had Alzheimer’s. The book helps adults navigate tough conversations with their parents about long-term care, retirement accounts and end-of-life planning.
“Being financially literate enables us to make smart decisions about our money,” Cameron told Daily Capital. “It helps us understand the benefits of budgeting, the dangers of taking on high-interest debt, and the necessity of saving and investing for the future. It’s the key to taking control of our money and improving our financial well-being.”
Here are a few tips about talking to your parents about these conversations.
Tip 1: Invite your parents to talk in a neutral place.
Where is the best place for you and your parents to have these conversations? You might pick a relaxing time of the day in a safe place, such as your parents’ favorite spot in the living room. (You probably don’t want to have these conversations around the Thanksgiving table with the entire family present.) In other words, choose the right time and place for these conversations.
Tip 2: Don’t make it all about money.
You don’t have to make the conversation about money, particularly if your parents usually have strict taboos about the subject. For example, you could make these conversations more about their wishes. In other words, you may say, “I appreciate everything you did to make sure you took care of me my whole life and I want to do the same for you. I want to make sure all your wishes are fulfilled.”
Remember to keep in mind that you are talking about your parents’ financial lives, so be sensitive about handling the conversations. You may not want to express strong opinions about how they “should handle” their money and other assets.
Tip 3: Take it slow.
When you’re talking about difficult conversations, such as debt, lack of a will or long-term care planning, your parents may get overwhelmed by these difficult conversations — and you might as well. You don’t have to have all the conversations at once or even within the same week. Take a few months to talk if you need to.
Don’t Wait Until a Crisis Strikes
You probably don’t want to wait to have these conversations with your family members for the first time when something terrible happens. You want these conversations to occur when your parents are still healthy and mentally alert.
Finally, remember that this article doesn’t cover an exhaustive list of everything you should talk about with your parents. You may uncover other things during the course of your conversations, such as who gets the restored Chevy or who gets great-grandma’s china.
For tracking your finances, get started with Personal Capital. Millions of U.S. households use the free and secure online financial tools to see all of their accounts in one place, analyze their investments and uncover hidden fees, and plan for long-term goals. Fee-based investment clients get access to personalized advice on everything from tax-loss harvesting to estate planning.
Personal Capital compensates Melissa Brock (“Author”) for providing the content contained in this blog post. Compensation not to exceed $500. Author is not a client of Personal Capital Advisors Corporation. The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.