When it comes to talking about money, there’s no more difficult discussion than the one you need to have with your elderly parents regarding their financial situation. Of course, the last thing you want your parents to think is that you’re fishing around as to what they have and what you’ll inherit. Because this is a very delicate matter, your approach has to be respectful as this may be something that your parents don’t feel comfortable discussing with you.
Here are some of the questions you should ask when you have this discussion with your parents:
- Do you have a will, and if so, where is it located?
- Do you have a safety deposit box, and if so, where is it located, and where are the keys to access the contents?
- Have you identified someone (e.g., a family member, close family friend, etc.) to handle your finances in case something happens to one or both of you?
- Have you documented all your assets and where they’re invested (i.e., name of the financial institution)?
- Is there anything you’d like me to do or take care if something happens to you?
- In the event you’re hospitalized, do you have a health care power of attorney or some other medical directive that documents your wishes, and if so, where is it located?
- If you need long-term care in a nursing home, do you have long-term care insurance, or will you pay for it out of your assets?
- Have you made any arrangements in the event of hospitalization or long-term care needs?
- If you access any of your financial accounts online, do you have your account numbers and passwords written down in a safe location?
When it comes to your parents’ finances, it’s imperative that you understand their plan if they need long-term care. As you probably know, today’s annual cost of long-term care can range from $70,000 to $90,000 depending on where you live and the facility you choose. With long-term care cost increasing at double the rate of inflation, the one thing we do know is that future cost will only go up. Your knowledge of their finances will dictate whether they can pay for it with their own assets, or if you will need to come up with some money out of your own pocket, which could quickly derail your own retirement plans.