How to Talk to Your Aging Parents About Their Finances
Between 2011 and 2024, an estimated 10,000 Baby Boomers will turn 65 every day, many of them with adult children who are facing a new chapter in their lives as their parents retire, grow older, and may soon need assistance.
Many people aren’t sure how to talk to aging parents about their future, as these sensitive topics can be difficult to broach. That’s why senior care experts recommend having “The Talk” early, following the “40/70 Rule”—when adults approach 40 and their parents approach 70, it’s time to start talking about long-term care, estate planning, financial issues, and other topics.
When starting “The Talk” with aging parents, it’s important to keep the circle small. Involve only a few key people, rather than orchestrating a full-scale family meeting that will feel like an intervention and put parents on the defensive. Similarly, instead of framing the conversation in terms of a future or current physical and mental decline, focus on positive elements such as building a future for the entire family.
It can also help to speak in terms of looking out for one another, rather than a child looking after a parent. One approach could be to make the financial review a family affair, with both parent and child taking a look at their finances. That way, everyone’s dignity is preserved and respected.
Putting a Plan in Place Through Power of Attorney
One of the first steps toward eventually taking control of elderly parents’ finances is establishing a power of attorney (POA), which grants an individual the authority to act on someone else’s behalf in specific financial, legal, or health-related matters.
The family can decide when the POA takes effect (typically, when the parent faces a deterioration in mental capacity), and how many (or how few) powers the POA grants. It can be reassuring for parents to know that they can cancel a POA at any time and that they will remain in charge of their own affairs as long as they are legally competent.
It can be more difficult to establish a POA if a parent already has dementia or Alzheimer’s disease. A physician may need to sign a letter affirming that the parent understands and can legally consent to the POA. If the parent cannot meet that standard, a judge’s approval may be required for the child to become a conservator or guardian.
That’s why it’s best to arrange a POA long before it becomes necessary, so that children are ready when it’s time to consider taking over parents’ finances, which typically comes with some warning signs:
- A parent has been diagnosed with a cognitive disease like Alzheimer’s and may soon be unable to make their own financial decisions;
- Unpaid bills, bounced checks, and calls from creditors are mounting in their home;
- They are making unusual or frivolous purchases, particularly online, via phone, and/or late at night; and
- They have been the victims of financial scams or fraud.
Above all, it’s key to keep communication open. The more parents and children talk with one another, the fewer surprises children will have to face later on.
Ensuring Peace of Mind
It’s important to think through the timelines of your parent’s needs when planning their legal and financial futures. Though getting through a conversation addressing all the sensitive issues outlined may be difficult, it will benefit both your parent and their loved ones immensely in the long run. Proper financial and legal planning and communication cuts down on immediate stressors like finding funding for care costs, and greatly minimizes later disputes by providing an account of the patient’s wishes.
The Funds for Living Program allows qualified individuals who are diagnosed with an advanced stage illness to receive funds based on the face value of their life insurance policy and can be a great option for those who need to finance the immediate future. Contact Fifth Season today to learn how to help give your parents peace of mind.