How to Talk to Aging Parents About Finances

aging mother with daughter

image credit: agilemktg1 via flickr

Women tend to be caregivers … of our children, of our spouses, of our parents.  While the timing of the caregiving varies, most of us will be responsible for taking care of others at some point in our lives.  This caregiving can be physical, financial, or both.  As people live longer, and their resources are expected to last longer, we frequently have to have conversations with our parents about how they want to be cared for, how much money they have, how they want to pay for their care, and how their assets will be distributed after their deaths.

These are difficult conversations.  Some families don’t talk about money.  Others talk about it freely.  Some families don’t talk about illness or death, while others do.  Every conversation is different.

The importance of discussing finances with parents

Here is a story of a woman who is a successful professional in her late 50s.  She has one sister, also a successful professional, also in her late 50s.  Their father is 92, living in assisted living.  The three of them live in three different states.  Their father requires more care, especially about his day-to-day personal finances.  The sisters are working to create and implement an overall financial and estate plan for him.

He is blind.  About a year ago, he had a fall and was moved to a rehabilitation hospital for several months to recover.  During his recovery, he became very disoriented and confused in the unfamiliar environment.  The daughters spent more time with him and learned he has a girlfriend (she is about 75) and that he has given her authority on his credit card and bank account.  The girls began to discuss his overall financial situation and his estate plan.

While he was in the hospital, the girlfriend also became sick and moved to another hospital for a time.  When he returned to the assisted living community, he was very disoriented that his girlfriend was gone.  Once she came back, he began to improve.

Now, the daughters are getting more involved with his care and with his finances.  They learned that several years ago, he executed a will leaving his estate to the girlfriend and his two daughters in equal shares.

The daughters began to gather information about his income and assets.  Both women are brilliant and highly educated scientists.  Managing their personal finances is not a strength of either woman.  One of them has taken the step of working with a professional advisor, who she called on for help.  Her sister sees the advisor as an outsider, and she has become adversarial.

They contact their father’s long-time attorney, who is about 85 years old.  The daughters suggest a trust to avoid probate and protect his assets in the event he becomes incompetent.  The father wants to set aside a portion of his assets to provide income for the girlfriend if he dies first.  A trust is a good way to do that.  Then the money is divided between his daughters when she dies.  It’s a good, simple, and effective plan.

The attorney drafts a trust and will that are modeled on documents from about 30 years ago.  The instructions in the documents are based on old legal guidelines and are not very detailed or flexible.  These documents are not effective and do not accomplish the father’s goals.

So now what?  This family is not communicating well and is unable to find common ground to make decisions and execute the father’s plan.

The father and daughters agree about providing some income to the girlfriend after their father dies.  The father ultimately wants his money to go to his daughters.  But the will and trust do not distribute the money in that manner.

The financial planner is providing education to the sisters and the attorney.  Her sister disregards the advice since she sees the advisor as the opposition.  The biggest breakdown is the elderly attorney, who dismisses the advice as not necessary.  The father does not understand that the legal documents don’t do what he wants, and the daughters are uncomfortable telling him that he needs a new attorney.

As a result, nothing has been done to carry out the father’s plan.  When he dies, the money will not flow as he wishes.  If he becomes incompetent, the plan cannot be amended.

It is a very challenging situation.  And not all that uncommon.

6 ways to talk to aging parents about finances

Objective communication and education are the best tools to break these patterns.  Time and patience are essential, to allow the families to accept the situation and try to find a way to agree upon, then carry out a plan that works for them.  It may be imperfect and may require compromise, but any plan is better than no plan. Here are some methods to use when looking to discuss finances with aging parents:

1. Communication. Express why lining up finances is important. If it helps, use a story to showcase the importance of discussing finances “before it’s too late.”

2. Help from siblings. Coordinate with siblings if you have them to work together to discuss finances with parents. Having support from your siblings can help.

3. Discuss your own financial situation. It can help a parent to open up if you share what you’ve done to get your finances in order whether that’s working with a financial advisor, writing a will, or creating a financial plan and sharing it with a trusted person like a spouse or sibling.

4. Discuss your parent’s future. It can be difficult for parents to talk about planning for when they are not around and some families are more open about discussing their future plans. Ask probing questions like, “are you looking to downsize your home?” “what type of care would you like when you’re older or if something happens to you?” Then you can start asking more direct questions like, “what legal documents do you have for your finances,” or “what documents do you feel you need to get to prepare for retirement or if something happens?”

5. Ask if there’s anything you can do for your parents. Asking if there’s anything you can do to help them enjoy life more – not necessarily money related. In time, your parents may be more comfortable with you helping them with their financial planning and discussing finances.

6. Get professional help. If you’re like many families, sometimes parents just aren’t willing to talk with you financially and it can be for many reasons. If you find that you can’t discuss finances with your parents, perhaps you can suggest meeting with an elder law attorney, an aging life-care professional, or a financial advisor. Most professionals will encourage your parents to discuss important financial information with you.

When is the best time to discuss finances with aging parents?

The best time to discuss finances with aging parents is as soon as possible.  Once our aging parents begin to lose their rational decision-making capacity, it can be very hard to communicate objectively, and the window for planning can slam shut.

Have aging parents?

If you’ve tried some of the methods above and are still having a difficult time discussing finances with your aging parents, give us a call and let us help 216-373-0808. Or leave a comment below with how you’ve dealt with discussing finances with aging parents.