Understanding your parent’s financial situation can help you to make important financial and medical decisions for your parents should the situation arise.
There are no two ways about it – it can be downright difficult to discuss your parent’s financial situation with them. However, you should not put off this conversation any longer than you need to. It is much better to have a firm idea about their situation today than it is to try and scramble to resolve an urgent and unexpected financial situation tomorrow.
Why You Need To Have the Financial Talk With Your Parents
Our parents raise us to the best of their abilities, they try to instill in us a sense of responsibility that should, extend to financial responsibility. As our parents age and approach the age of retirement, we will want to ensure that they are set to take care of themselves and their financial needs. If your parents are ill equipped to handle their future finances, you may find that the burden of doing so falls to you. It can prove to be very difficult for a young adult to juggle their career with the need to care for their own children.
If you are not aware of your parent’s financial situation you may find that several unexpected, and expensive, financial hurdles are thrown your way. You certainly won’t be in any position to help them with their financial hurdles while taking care of your own finances – unless you are able to plan correctly.
The initial stages of the conversation with your parents might be a little bit uncomfortable; however, it is important to remember that your parents are not yet used to the idea of you being the person to take the reins of responsibility.
There are several items that need to be discussed with your parents, by laying it all out on the table you will be able to ensure that you and your parents are both on the same financial page.
While your parents may be of age to qualify for Medicare, there is still a good chance that they will need supplemental medical insurance that will help them to cover the expenses of all of the prescription medications that they may need. Do a bit of research into the medical insurance options that your parents may qualify for.
Long-Term Care Insurance
Your parents probably plan to stay in their home together. However, oftentimes our parents require care in a long-term facility that is equipped and qualified to provide them with the care that we will not be able to provide. Long-term in-home care can prove to take a huge emotional and financial toll on family members. If your parents do not have long-term care insurance then you should do a bit of research into options that you can present to them.
Power of Attorney
Should your parents be in a situation where someone needs to make medical or financial decisions for them, it is important that the task falls to a responsible party. Ensure that your parents understand the importance of designating a person to take care of their financial and medical decisions if they become unable to do so.
Find out what plans your parents have for their estate. If there are any specialized instructions then you should be made aware of them in order to prevent any arguments when the time comes to handle their estate. Suggest to your parents that they meet with a reliable attorney in order to establish the “fine print” aspects of their estate planning.
Retirement Planning and Financial Stability
Tread carefully around this topic in order to ensure that you have a firm understanding of what your parent’s financial situation is. Do they have sufficient savings to see them through many more years? Will they be able to maintain their current lifestyle based upon their available finances?
While no one likes to think about it, final expenses can cost a grieving family a significant amount of money that they simply may not be able to afford. There are insurance policies and savings accounts that can help a family in mourning deal with the final expenses that are related to memorial services and burial costs. Be sure to also understand what your parent’s wishes might be; it is better to know than to find your family in conflict over a decision during the mourning period. Get this difficult topic resolved and out of the way – you will all feel much better for it.
Your Checklist For Discussing Your Parent’s Financial Situation
Use the following checklist when discussing your parent’s financial situation in order to ensure that everything is covered.
• Make a list of the topics that you will be discussing to make sure that you don’t leave any vital area out during your conversations.
• Have a list of your parent’s financial accounts and relevant account information so that you will be able to access the account should you need it. You may want to suggest to your parents that they allow you access to the accounts now so that you can have ready access to them should something unexpected happen.
• Get a list of important documentation that you will need if you are required to make important financial and medical decisions for your parents. Be sure to ask your parents where they store the vital documents that you will need to have access to.
• Find out who your parents have used to provide them with financial and legal advice. By having the contact details for their financial and legal advisors you will be in a much better position to contact them should you have the need to take over financial and medical decisions.
If you find that discussing your parent’s financial situation brings up a bit of anger and resentment with your parents you should take a brief step back. Remember to approach your parents with concern for their well-being. It can be difficult for an aging parent to face that they may not be able to make decisions for themselves in the future.
What Do You Think?
How would you approach your parents with this potentially touchy subject matter? Have you had to change your approach with your parents when discussing their finances?