It's almost inevitable, at some point our parents are going to need our help with financial or health issues. Studies show that 49 percent of us avoid discussions about money matters with our family. The real danger is not knowing. If you're out of the loop on your parents' financial issues, it's hard to know what type of care would be affordable if they have an accident or become ill. It may be time to talk to them about financial matters.
One or both parents may become ill, incapacitated, susceptible to scams or fraud or unable to keep up with their finances as their mental and physical abilities decline. This situation can be difficult in families where the subject of money was never talked about. But waiting until a crisis occurs can cause stress, heartache and losses. Planning helps ensure our parent's wishes are carried out and reduces disagreements among siblings regarding what our parents would want to be done. Below are some suggestions around this difficult conversation:
• Don't minimize your parent's need for a sense of personal control. • Don't confuse frailty physically with mental incapacity. • Recognize that you may have to suggest a discussion several times. • Give ageing parents as much power and involvement in financial decisions as possible. • If you find items like unpaid bills, misplaced documents, unfiled tax returns, don't panic or place blame. Don't judge your parents' choices, if they have $50,000 in a savings account, earning 0.02%. It's their choice. • If you must assume full responsibility for a parent's finances, continue to share information with them. You may even want to consider family meetings to discuss finances, to keep everyone current on spending and income.
It is vital that your parents have a will and power of attorney if they have not already done so. Without them, your parents will have lost their ability to name a trusted representative to be in control of their affairs. You have to discuss finances with your parents, and if you don't, the long-term repercussions can be severe.
It may be awkward to approach this subject. Let them know that it will be easier for you to help them when they need it most. Just beginning the discussion means facing difficult issues such as death or incapacitation. Many of us are resistant to talking openly about them. For parents who are reluctant to sign documents because they feel it reduces their control over their finances and even their lives, suggest naming two children or a child and a lawyer or accountant to act on their behalf. The two parties named then act as a check on each other to ensure everything is being carried out in the best interest of the parent. A power of attorney can be left with a third party with specific instructions, as well, it can be limited in terms of a particular period or specific acts. Powers of attorney and living trusts are essential to have in place; it gives someone else the authority to make critical decisions. If our parents aren't mentally capable of signing these documents, you may need to seek legal guardianship, which can be a long process.
You're not prying. You don't need to know what's in the will, just where it is. You don't need to know how much insurance there is, just where the policy (policies) are kept. Becoming informed about where all the financial stuff is, and talking about how your parents want matters handled if they couldn't do it themselves, you'll be able to take care of them in the way they would wish to.
So precisely what do you need to know? Where do you find the personal and financial documents in the event of accident, illness or death? Here's the information you should know:
• Where the will is kept and who the executor is • Where important legal documents are kept • Health card and health records • Pharmacare and other health insurance numbers • Debts and payments • Tax returns • Location and keys for a safe deposit box • Names and phone numbers of doctors, accountant, lawyer, financial advisor, etc • Details of insurance policies, including health, life and long term care • Income and investments • Bank account numbers, name and location of financial institutions
Remember, it's essential to respect their rights and wishes. Give them as much control as possible.
Maureen Babin has been in the financial industry since 1972. She’s the author of The Gender Gap, What Every Woman Should Know About Money. Check www.Amarackfinancial.com