When it comes to discussing finances with aging parents, it’s often a child, niece, or nephew who broaches the topic. This person is usually comparatively successful, organized, or deeply concerned. More often than not, they also witnessed estate planning or long-term care play out poorly in someone else’s life.
Now, their parents are starting to show more signs of aging, and they’re not sure of two things:
- Do they have enough to be well taken care of? (Or will they need my/our help?)
- Is their estate plan well prepared for a smooth transfer?
These are important questions with significant emotional and financial implications, but if your aging loved ones aren’t volunteering their affairs, how do you approach the conversation?
Define Your Role First, Then Responsibilities
Starting these conversations from a place of concern can sometimes be challenging. Before discussing these issues, it’s crucial to evaluate your role in your loved one’s financial and estate planning. Are you a trustee? A healthcare power of attorney or durable power of attorney?
You’re not approaching this question, angling for a specific answer. You just want to make sure their decision-makers are in place to support them when (not if) the time comes.
Don’t jump to your concerns. Know what role is in these decisions, if one is given at all. This helps prevent surprises if someone lists you for a role without discussing the responsibilities.
The Most Important Questions to Ask
Once you have a clear understanding of your role, there are two main categories of questions that are valuable to ask.
The first is identifying their financial team. We always encourage identifying supporting players like their:
- Financial advisor
- CPA
- Estate planning attorney
- Business partners or key employees
This team of people often proves invaluable when you have questions, and your loved one has passed or can no longer manage their own affairs. If you’re a backup trustee and are unaware of where important documents or information are stored, you could find yourself in a difficult position. Being thrust into such a role often requires quick decision-making, usually involving finances, and you may not have the time to fully familiarize yourself with the situation.
The second category is practical, though it may be more sensitive in nature. This includes questions like:
- Do you have enough savings to remain financially independent for the rest of your life?
- What is your plan for long-term care? Where would you like to live? How will you pay for it?
- Do you have any expectations of support from me and my family that we should be aware of?
- Are there any decisions that will be passed to me regarding your estate that we should discuss? How would you like certain key assets (like a vacation home) divided?
When possible, start these conversations early. Ask them about their estate plan and who holds the positions of power in their plan. It’s not a matter of “if” something will happen but “when,” and understanding their arrangements can significantly ease the process for everyone involved.
By understanding your role and asking the right questions, you can help ensure that both you and your parents are better prepared for the future.
