Talking to Your Aging Parents About Money: PART 2
In our last blog, we explored ways adult children could start the conversation about money with their parents. Once the ice is broken, an opportunity to deepen the conversation presents itself. The "money" subject is the first of several layers of important issues aging adults need to address. The following are major ones adult children need to discuss with their parents.
DOCUMENTS: Locating important documents should be tackled first. This may take some effort. Such documents have accumulated over many years and may be stored in many different places. Among these documents are:
Debt information, including mortgages, vehicle loans, and other debts
Divorce decrees, name change records, and adoption paperwork
Employee benefits information including pensions, 401(k)-type accounts, and insurance
Financial account information like bank and investment accounts
Funeral or cemetery pre-arrangements
Insurance policies, particularly health, long-term care, and life insurance
Living wills or other advanced directive items
Marriage, birth, and death certificates
Power of attorney documents
Real Estate and vehicle titles
Wills and other estate documents
Identify any safe deposit boxes and the keys and passcodes needed to access the boxes. Adult children should have their names added to those authorized to access the boxes. An inventory of the contents of each box should be made.
CONTACT LIST: A list of contacts should be assembled, including family, friends, and professionals. This will serve as the master list of people to be contacted in case of illness or death. It needs to be updated periodically. The list of professionals should include:
ESTATE PLANNING: As noted in the section above, wills and other estate planning paperwork needs to be located. If no will exists, adult children should push their parents to have one created as soon as possible. Without a will, state laws dictate how an estate is distributed rather than the deceased's particular preferences.
POWER OF ATTORNEY: There may come a time when an older adult cannot manage their own affairs. Whether temporarily or permanently, another person must be authorized to act on their behalf. Power of attorney (POA) is the legal mechanism for enabling this. There are several different types of POAs.
Limited Power of Attorney – allows the agent to handle only certain things or for a limited period.
General or Ordinary Power of Attorney – allows the agent to take care of a wide range of matters before a principal is unable to make their own decisions.
Durable Power of Attorney – unlike a general POA, this type continues even if the principal is incapacitated.
Springing Power of Attorney – this type of POA only kicks in when a specific date or event occurs. It may expire when the principal regains their ability to handle their affairs.
Financial Power of Attorney – a POA restricted to financial decisions.
Medical Power of Attorney - a POA restricted to healthcare decisions.
Rules for POAs may differ by state. Adult children and their parents should consult an attorney to understand POA options applicable to their specific circumstances.
HEALTHCARE CONSIDERATIONS: Another essential document is the advance healthcare directive. Sometimes called a living will, it contains an individual's preferences for handling their medical care. An attorney is not needed to create this document, but many legal professionals will assist with this if desired. Sharing an updated list of medications with adult children is also important. In an emergency, the information may be crucial in delivering effective medical treatment.
WHERE TO LIVE: Similar to healthcare, older adults need to consider their preferences for future senior living arrangements. Most people intend to live independently at home as long as possible. It's a smart move, however, to discuss potential scenarios with adult children. This way, all factors, including financial, can be thought out ahead of time.
FINAL ARRANGEMENTS: No one likes to talk about death, but putting off the discussion of some basic preferences could cause future anxiety for loved ones. For example, letting others kn
ow of your choice of cremation or traditional burial will settle one crucial question. Sharing preferences for funeral arrangements and the final disposition of remains will further relieve the pressure on family and friends.
IT'S NOT ALL ABOUT MONEY: Not all the above subjects directly touch on money. However, opening up the conversation about money can lead to broader information sharing that will lead to peace of mind for both aging parents and their adult children.