Some reading the title of this post may already feel the sweat breaking out on their foreheads; for many of us, the thought of getting actively involved with our parents’ finances is a daunting prospect. After all, these are the people who raised us, who guided us into adulthood. What gives us the right to think we need to know about their financial plans or—even worse—the balances in their accounts? Some may also fear that aging parents might think their adult children are just trying to see how much they’ll get upon their parents’ demise, or, even worse, that they’re trying to get control of their finances right now.

Certainly, discussing financial matters with aging parents can make for some tense moments. On the other hand, as parents age, cognitive decline makes it imperative that someone help them stay safe from the scammers who are all too eager to take advantage of the most vulnerable, especially those with significant assets. It is also still common that the surviving parent may not be the one who handled the major financial decisions for the couple; these persons are even more likely to benefit from knowledgeable, caring supervision of their financial plan and affairs by next-generation caregivers. Finally, it’s important for those who might be in the position of needing to settle their parents’ estate to have the information needed to proceed efficiently and in accordance with the parents’ wishes.

Honest Communication Is the Key

One of the most important steps is also one of the most basic: Stay in touch. Elders who are in frequent communication with their children or other younger caregivers are much less likely to be victimized, financially or otherwise. Consistent contact by family members, and the ongoing awareness of elders’ situation, resources, and concerns that results, will do almost as much as any other single step to assure that aging parents continue to live securely and with dignity.

At the same time, it’s important to remember that different family members—and especially those from different generations—tend to view money and its proper uses through different lenses and with different levels of understanding. When financial discussions are ongoing, keeping these different perspectives in mind and maintaining respect for all points of view can lead to more productive conversations and decisions. Once again, though, the driving factor is open, honest, and respectful communication among all parties.

Estate Planning: Asking the Critical Questions

One of the most important ways adult children can assist is by getting a working knowledge of aging parents’ estate planning, including, but not limited to:

  • Whether there is a will or a trust, and if so, where the documents are kept;
  • Whether there are any advance health directives in place, and if so, where the documents are kept;
  • Who the parents’ principal legal, financial, health, and other advisors are, along with their contact information (unless this is already known);
  • The location of any safe deposit boxes, as well as the keys to the boxes;
  • Amount and beneficiaries of all life insurance policies, as well as the names of the issuing companies and the locations of the policy documents.

 

There may be other basic questions in certain circumstances, but knowing the answers to these will be a huge help for most situations.

Financial Planning and Eldercare

Aging parents’ financial planning and needs should also be carefully considered. Elder care planning should encompass not only an assessment of their resources but also attention to matters like:

  • long-term care strategy and funding (whether paid from existing assets or with long-term care insurance—LTCI);
  • appropriate budgeting;
  • healthcare resources and funding; and
  • desired housing arrangements (whether aging in place or moving into a retirement community or assisted living).

 

This last matter may deserve ongoing consideration with respect to the advisability and timing for selling the primary residence. For example, proceeds from such sales may be needed to provide funding for assisted living if aging in place becomes inadvisable because of deteriorating health or mobility.

It may also be helpful to work with aging parents to consolidate and simplify their financial affairs, both for the benefit of the parents and also for those who are providing care and supervision of their finances.

Those who are supporting aging parents will do well to educate themselves not only about their parents’ plans, resources, and capabilities, but also about various types of public assistance that may be available to help meet the needs of elderly persons. In fact, failing to properly coordinate such sources of assistance is one of the most common oversights of those providing care for aging parents and other relatives.

Coordinating Family Resources for Eldercare

In some circumstances, the financial responsibility for eldercare may fall upon one or more adult children. When this is necessary, open and honest communication around family financial coordination becomes more important than ever, if for no other reason than to avoid caregiver burnout or resentment among family members who feel unfairly tasked, whether physically, emotionally, or financially. In these cases, transparency around parents’ estate plans, financial needs, and healthcare can help adult siblings and other next-generation caregivers.

For some families, a financial advisor or eldercare coordinator can provide focus and coordination for cooperative care for aging parents. Such advisors may be able to:

  • Facilitate communication and negotiation and help the parties develop problem-solving skills;
  • Provide education about eldercare resources;
  • Create, modify, or implement an eldercare plan (and reassess it as necessary to keep the older adult safe, resolve ongoing disputes, and meet the elder’s changing needs);
  • Make recommendations for resolving disputes about the care and safety of the older adult; and
  • Make decisions authorized by the court in the scope of a referral order.

 

Availability of an impartial, professional party can be a tremendous help to adult children who are trying to make decisions in the best interest of an older parent.

Optima Asset Management, as a fiduciary financial advisor, understands the important financial and emotional ramifications of managing care for an aging parent. If you or someone you know has questions, please let us help find the answers.