It can be challenging, but it doesn’t have to cause discord.
Talking about money is hard in the best of times. It’s doubly challenging when facing emotionally fraught family transitions, such as when it’s clear an aging parent needs help managing their finances due to the physical or cognitive impairments that often come with age. As tempting as it can be to just bottle everything up, not talking about these issues can lead to losses — both financial and familial. But it doesn’t have to turn into a family drama: Happy endings are possible by building up communication and trust. For many family dynamics, that can be easier said than done. Here are a few tips to keep in mind when it’s time to discuss finances with your aging relatives.
Recruit help
Usually one child — often whoever’s geographically closest to the aging parent — steps up to shoulder most of the physical and financial tasks of elder care. Taking on all the responsibility is one reason more than half of caregivers report a decline in their own health and significant depression. It doesn’t have to be that way. Ask other family members to play a role wherever they’re located. Research, finances, and paperwork can be handled from anywhere. Try to match up skills with responsibilities. For example, the most financially savvy sibling can help handle money matters, regardless of where they’re located.
Even if there are other family members who can help, it’s important to think about reaching out to a third party you trust for help with big decisions. This could be a cousin, niece, close family friend, or even better, a professional advisor who can provide input that isn’t shaded by sibling rivalry or contentious conflicts within the family. If the resources are available, think about adding a geriatric care manager to the trusted team of medical (which could include a mental health care professional), legal, and financial advisors. They could offer informed advice on navigating bureaucracies and care options and any emotional roadblocks that need to be addressed.
Don’t rush real estate decisions
Avoid the urge to quickly move an elderly parent to a community or facility — most people want to remain in their homes for as long as they can. That said, it requires an open dialogue with your relatives about what is and isn’t possible because living at home isn’t always affordable or realistic. For example, homes can be adapted with stair lifts, safety bars, and other renovations. They don’t come cheap, but improvements that don’t add to the value of a home may be deductible as medical expenses.
If remaining home isn’t desired or possible, you’ll need to assess what level of care, if any, your aging parent needs. This requires a candid family meeting and may need a series of professional assessments. Then, do your research (this can be where that delegating we talked about earlier comes in). There are facilities that range from just providing meals, laundry, housekeeping, and social activities to those that offer medical supervision and care; some provide specialized dementia care. Costs increase with the quality and quantity of amenities and the level of care. While facilities have trained staff who can make assessments, a gerontologist or care manager may be a better source of unbiased judgment and recommendations. They can also help explain and diplomatically convey the assessment to family members who may be in denial or feeling guilty. Encourage every competent family member to take part in the search and to visit candidate facilities.
Get your docs in a row
Cognitive impairment is a real concern as people get older. At first, elderly parents might simply require another set of ears when meeting with doctors. However, it’s vital to get financial and legal documents in place as soon as possible with the help of a financial advisor, accountant, attorney, or all three.
A durable power of attorney clause is the most important. This allows the person appointed to handle the legal, tax, and financial affairs of someone who cannot perform those duties. Next, have a health care proxy or medical health care directive created that will allow an individual to make health care decisions for someone who is incapacitated. Third, make sure your elderly parent has a living will that describes the kinds of care and treatment to be provided, and not provided, at the end of life. Finally, complete a Health Insurance Portability Act release that will allow medical records to be accessed.
All family members should be made aware of the contents of these documents so there’s no confusion later on. Whoever is named on these documents as the decision maker shouldn’t just be trustworthy, but also able to keep the lines of communication open between family members in difficult times. The need for the documents can be explained as a way to ensure the senior’s wishes are followed.
Take good notes throughout the process and do a caring, thoughtful job when you’re parenting your parents. You want your own kids to have a good roadmap for taking care of you when that time comes.
And don’t hide money talk in the process of getting to the right solutions so that your kids are learning those skills as well.
Lori R. Sackler is a financial advisor, senior vice president, and family wealth director who leads Evergreen Wealth Management Group at Morgan Stanley. She is the author of The M Word: The Money Talk Every Family Need to Have About Wealth and Their Financial Future published by McGraw Hill and two other books, The M Word: How to Have the Money Talk and the Second Edition of The M Word: The Money Talk released in April of 2023.
