While no one wants to think about mortality, it’s an unavoidable aspect of living.
Within a family, estate planning, and simple financial collaboration are necessary for the family’s financial continuity. So, at some point, most people will be faced with the challenging task of discussing estate planning and finances with aging parents.
None of this will be easy. But the potential consequences of forgoing these conversations will be even less easy. So, in this article we will cover:
- How to go about discussing finances with aging parents
- What you need to talk with them about
- How to help elderly parents with their banking
- Managing finances for parents with dementia
- Finally, a simple checklist for taking over parents’ finances
How Do You Discuss Financials With Aging Parents?
While it’s normally a private topic, at some point you will need to understand your parents’ financial circumstances.
In many cases, parents will naturally become defensive when this kind of topic is brought up. It may be perceived as a threat to their autonomy and independence. In other cases, it will just be a painfully awkward conversation, at least at the start.
No two relationships between parent and child will be exactly the same. However, there are always common practical and ethical threads we need to consider.
There are a few steps worth considering if you’ve found yourself in this situation.
Always Consider Their Feelings First
This can be hard in many cases. However, in all but the most extreme cases, there is no point trying to beat around the bush. Be blunt and consider their feelings.
Generational differences are a common issue in these situations. Different generations have been through different financial experiences and differing cultural viewpoints are often inevitable. But being at least aware of your parents’ viewpoints is always helpful.
Bring In Your Siblings If You Have Any
Make sure the family is together to deal with this situation. Ideally, the sibling with the closest relationship to your parents will be involved as well. Some parts of the conversation must be private, but the family should be united as much as possible to make everything easier.
Offer To Help Where You Can
Help your aging parents financially and practically where you can. This means that perhaps you can start by simply starting to deliver them groceries, or similar tasks. The more involved you are in your parents’ retirement life, the more they will normally be willing to confide in you.
At some point, personal relationships override all practical matters, including finances. The help you offer them can also help ease their financial burdens and those they face in their daily lives.
Ask Your Parents For Advice
You can approach the topic starting by learning from your parents. Try talking about your own financial goals and challenges, and take a genuine interest in their beliefs surrounding finance. A genuine conversation about personal and estate finances based on mutual respect and cooperation
Helping Elderly Parents With Banking
There is a general consensus on how to approach elder financial planning. In many cases, elderly parents will be hesitant to ask for help, even when they really need it. In general, there are a few things you can and should do.
Start Talking Early
The earlier you can get to talking about it the better. Peoples’ physical and mental health typically only gets worse with time. It is even worth it to preemptively talk about how to handle affairs before something bad happens or before their condition deteriorates.
This isn’t easy for many people. But the earlier you can set your relationship with your elderly parents right and start helping them, the better.
Take Inventory
Taking inventory of your aging parents’ current legal and financial documents as early as you can is important.
So, when you can, make sure you have detailed files including birth certificates, insurance policies, and estate planning documents. But, make sure all of this information is stored securely and in an organized manner.
Work Gradually
Make sure you’re on the same page with your parents and any siblings as much as possible. Start small and increase your role in your elderly parents’ finances slowly, if possible.
Also, wherever possible, start taking care of their financial responsibilities with them. A slow, respectful, non-intrusive approach can go a long way.
Consider Power of Attorney
In many cases, while it can be a hard conversation to have, power of attorney is necessary. Power of attorney grants one person the power to make decisions on the other’s behalf. There are several kinds of power of attorney, including temporary financial and medical powers of attorney.
Separate Your Finances
Even though it is a seemingly simple and convenient course of action, you should refrain from combining financial accounts. It is a slippery slope that also jeopardizes your own financial plans and may compromise estate planning efforts.
The 5 Key Components of Estate Planning & Why You Need to Know
Managing Finances For Parents With Dementia
In some cases, much of what we’ve covered so far will likely not cut it. One of the most serious cases is dealing with elderly finances for parents with dementia.
Notice Warning Signs
Looking out for the warning signs of severe dementia is important. The main warning signs include:
- New and unusual shopping habits
- Having piles of unopened mail
- Physical difficulty going to the bank and otherwise conducting day-to-day financial affairs
- Worsening memory problems
- Increasing paranoia and unrealistic thought patterns
It is best to handle the kinds of affairs we’ve discussed far before the worst of the disease takes hold. However, these and other warning signs mean that time is of the essence and the conversations you’ve (hopefully) already had should be acted upon with greater prudence.
Power Of Attorney
Taking over elderly parents’ finances legally is only possible through power of attorney. But the parent with dementia must still name the individual to whom they are providing power of attorney.
While the parent still has the legal capacity to make decisions, their decisions may not be overridden by the individual with power of attorney. However, making the designation is a prudent step in the case that the parent is at risk of becoming legally incapable of making financial and health decisions.
Conclusions: Checklist For Taking Over Parents’ Finances
- Consider your parents’ feelings
- Start talking about it as soon as possible
- Work with loved ones close to your parents as much as possible
- Offer help wherever you can, not just in purely financial matters
- Ask your parents for advice
- Keep stock of your parents’ significant documents
- Be aware of the warning signs for all kinds of mental health challenges common in aging individuals
- Consider power of attorney when necessary, and ideally discuss it early
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