2021 Financial Check Ups: Your Parents and Their Money
With the ongoing COVID-19 global pandemic reminding us that life is fragile and unpredictable, we should begin checking in with our parents now — this month — to make sure they have important financial planning documents in order, including powers-of-attorney and health directives to make sure you (or another close family member) can help care for them if they are unable to make decisions for themselves.
The more difficult part of the conversation, or series of conversations, is figuring out how they’re situated financially for a long retirement. That means asking them to open the curtain on their own financial strength as well as the sort of protection plans they’ve put in place. If you don’t know if your parents have the medical or disability insurance they need if one of them gets sick, it’s vital to find out now so you aren’t surprised down the road. Or in the next six months.
What Do They Want?
If you haven’t already talked about long-term care options and how your parents want to live out their days (whether or not they are able to care for themselves), that’s a good place to start. You need to understand their wishes to make sure they receive the kind of care they would want if they are no longer able to communicate or suffer from memory loss because of a health condition.
Once you know what they want, you can start to dig into the question of whether it’s affordable. Legally, parents do not have an obligation to tell their children about their finances. Some may not be emotionally ready to share that information, especially if they are embarrassed about where they stand. Do what you can to put them at ease. The biggest advantage you can give yourself is the avoidance of surprises down the road.
Tone Is Key
You need to start these talks at the right time and in a positive way. If you are too forceful and your parents think you’re trying to push them toward a nursing home or you are after their nest egg, that’s problematic. Likewise, if you are too timid your parents may be able to brush off the subject with a breezy “We’re fine.”
One thing that may help: Practice. Go over the conversation with a friend, sibling or spouse to role play how it might go. Remember, experiencing a slightly uncomfortable moment now can give you all valuable peace of mind for years to come.
Use Yourself As An Example
If you’re having trouble coming up with a conversation starter, consider using yourself as an example. Talk to your parents about the steps you and your spouse are going through for your own estate planning, including buying long term insurance, redoing your wills or whatever else you’ve been up to. If you are open about your own finances, it may make your parents feel more comfortable about being open with theirs. Or, if that doesn’t feel authentic, consider sharing a story about a friend or an anecdote from the news. It’s all about just finding a way to get started.
Get It On Paper
If they can’t bring themselves to open up, ask them to write down their plans on paper. Sometimes it’s just easier to express things in writing than it is to say them out loud. Ask them to write down their thoughts about any planning they have done, where their important documents are kept, and any wishes they want you to know about. Later, you can have another go at it with more specific questions after you have broken the ice.
With Reporting By Cassandra Andrews