Tips for easing tough financial discussions with aging parents

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For many families, it is the elephant in the room: the necessary but potentially awkward discussions between aging parents and adult children about issues like where the parents envision living as they grow older and more dependent on others; the role family members are willing – or not willing – to play in caring for an ailing parent; and, of course, how the potentially weighty financial responsibilities associated with elder care will be handled.

While many families avoid talking frankly and openly about sensitive issues such as these, the best outcomes tend to be for those who address the “what-ifs” proactively, discussing the issues before a crisis forces their hand.

Here are five suggestions to help initiate and frame the discussions:

1: Enlist a financial professional to facilitate and offer guidance. Most parents and children have not been down this road before. What’s more, cross-generational discussions involving aging and family dynamics can be emotionally charged. It’s not always easy to approach issues like these, especially if the parents don’t bring them up, which is why it makes a lot of sense to find a financial professional to facilitate these conversations.

The financial professional can help mediate if the need arises, and they can be the ones asking the tough questions, sort of taking on the “bad guy” role. 

Get a referral from someone you know to find a Certified Financial Planner with experience in elder care and family issues, or check out the Financial Planning Association’s searchable national database of personal finance experts, at www.PlannerSearch.org.

2: Hone in on housing. Find out where your parents want to live as they age. Do they envision staying in their own home? Do they expect to move in with a family member? If either of these options appeals to them, how might the home need to be modified to accommodate an older person with restricted mobility and other limitations? Is assisted living an option? Do the parents have the financial means to pay for home modifications, or for assisted living, or for nursing-home care, should that become necessary?

3: Dare to discuss health care. Contemplating the possibility that you, your spouse or a parent will encounter a serious health issue that requires some form of long-term care is hard. But not only should families discuss the real possibility that parents will need long-term care at some point in their lives – the U.S. government puts the chances at about 70% – but they also need to dig deeper into the issue by discussing expectations, roles and finances.

Are parents expecting a family member, or family members, to assume a caregiver role if the need arises? Are family members willing to serve as caregivers? If so, who, in what capacity and for how long? What impact would taking time off to care for a parent have on the caregiver’s finances and career?

If they don’t expect to rely on family members, where will the parent get care if it’s needed? Does the parent prefer in-home care? Another care option? What might the various care options cost, who will be responsible for covering those costs, and how?  Would it be wise and financially practical to invest in some form of long-term care insurance, and if so, what kind?

The issues are myriad and complex. This is an area where guidance from a financial professional with elder-care expertise can be especially valuable.

4: Be forthright about your financial picture. In working through the family dynamics of elder care, it’s important that the parents and their adult children be upfront with each other about their financial situations. It is important to get answers to these questions: Do the parents have the means to cover their expenses in retirement? If not, what resources (government programs, etc.) might be available to help? And to what extent are the adult children willing and able to provide financial assistance?

Being organized should also be a priority:  Are the parents’ assets properly titled? Is information about assets, accounts and beneficiaries (retirement, bank, insurance, etc.) up-to-date, well-organized and readily accessible to the children, should they need it?

5: Ensure that your parents’ estate and affairs are in order. In the same organizational vein, it’s vital that parents have the legal documents related to their estate in order and up to date. That includes wills specifying how assets will be distributed, powers of attorney (over financial, medical and other decisions, should one or both of the parents become incapacitated), and a living will specifying their end-of-life wishes.

JASON E. SIPERSTEIN, CFA, CFP, is the president of the Financial Planning Association of Rhode Island and president of Eliot Rose Wealth Management. He can be reached by email at jes@eliotrose.com.