In a recent survey, a stunning 75 percent of Americans revealed they haven’t had a financial talk with their parents, and 22 percent claim it’s because they believe those conversations aren’t appropriate — money has traditionally been a taboo topic. But as your parents get older, it’s important to broach the subject, because whether you talk about it or not, you’ll inevitably need to sort out their finances someday.
Jennifer Jedrzejewski, J.D., CLU®, CFP®, a member of the Advice Practice team with Northwestern Mutual, says there are several questions you should ask your parents as they grow older.
- DO YOU PLAN TO STAY IN YOUR HOME OR ARE YOU CONSIDERING DOWNSIZING?
Selling the family house is fraught with emotions. Your parents may be perfectly happy to remain in their home, but as they age that could change. A good way to approach the topic is to ask if they still enjoy living there; for example, do they still love working in the yard, or has the upkeep become a burden? Do they still love all their space, or would they feel better in a smaller home, perhaps something that’s all one level?
- WHEN WAS THE LAST TIME YOU UPDATED OR REVIEWED YOUR ESTATE PLANNING DOCUMENTS?
Often times people draw up these documents when there is a change in their lives like the birth of a child or a loved one passing away. However, not everyone thinks to regularly review and update the documents that make up their estate plan. If these documents get out of date, your parents true wishes may not be followed. An up-to-date estate plan is vital to ensuring that your parents’ assets are distributed to the people and/or charities that they select and that they have trusted loved ones named to make decisions on their behalf if they are no longer able to do so.
In addition, reviewing and updating beneficiary designations on each of their financial accounts like life insurance, retirement accounts, and so on is also important since estate planning documents don't override the named beneficiaries on these accounts.
- WHERE DO YOU KEEP YOUR ESTATE PLANNING DOCUMENTS?
Some people want to keep these in a safety deposit box, but that can create hurdles if you as the child don’t have the authority to access them, points out Jedrzejewski. “If your parents are not comfortable keeping the documents in the house, just make sure you know how to access them so you can act on your parents’ behalf.” If the papers are stored in a secure location digitally, make sure you have the password, but keep in mind that some institutions might not accept a digital version.
- HAVE YOU COMMUNICATED YOUR WISHES REGARDING LIFE SUPPORT?
As your parents get older, it’s important to know their wishes for medical treatment for the end of their life or in a case where they could be permanently unconscious. These wishes need to be documented in a part of their estate plan known as a living will. And, in a case where they can’t make medical or financial decisions on their own, they will need a healthcare power of attorney and financial power of attorney to designate someone to make decisions on their behalf.
- WHO ARE YOUR TRUSTED ADVISORS?
You’ll want to gather contact information, especially if they are reluctant to share their financial details with you personally. And if they don’t yet have an estate planning attorney and financial advisor, this would be a good time to help them find one.
“Every family situation is unique, so if your parents hesitate to talk to you, encourage them to find an advisor or other trusted professional with whom they would feel comfortable reviewing their financial details,” Jedrzejewski says. “The goal is to give everyone peace of mind that your parents wishes will be documented and carried out, which can help your parents move into their next phase of life confidently.”