As your parents get older and their mental and physical capacity wanes, chances are they are going to need your help with financial and healthcare issues, and in many cases arranging aged care. But will you be prepared?
One or both your parents may fall ill, become incapacitated or lose their ability to handle complex financial affairs due to dementia. In this scenario, it will be up to you and your siblings to make decisions regarding their finances, health and living arrangements. But in times of crisis it can be difficult to make the right decisions and family squabbles are common.
That’s why it’s better to talk to your parents about their finances early on when they are still healthy enough to make their own decisions and talk through any issues with family members.
but how do you broach the subject?
Needless to say, talking to your parents about their finances can be quite an awkward topic to broach. So here are some tried and true techniques to bring up the subject in a sensitive and effective manner.
- Ask your parents about their wishes: It’s important to centre the conversation around what your parents want to achieve with their finances. Let them know that you’d be happy to help out when the need arises but that it will be easier for you to carry out their wishes if you know what they are.
- Explain why it’s important to act early: The earlier you start talking to your parents, the better. Don’t wait until something is wrong. Explain that it’s important to make decisions about things like power of attorneys before the need arises, when they still have their mental faculties and are legally able to sign documents.
- Discuss your own financial plans: One good way to bring up the subject of finances is to fill parents in on some of your own financial and estate plans. It’s a non-confrontational way to get them thinking and talking about their own situation.
- Invite them to discuss finances with your financial adviser: Sometimes it can be easier to discuss finances with an objective third party present. Financial advisers are trained professionals who know what questions to ask and who have experience dealing with both the financial and emotional issues surrounding estate planning, aged care and enduring powers of attorney.
what do you need to know?
Once established communications with your parents what are the essential things you need to know?
Ideally you should encourage your parents to plan their estate with the help of a financial adviser and discuss their decisions with family members. An important part of this is to establish enduring powers of attorney and discuss options for aged care arrangements if the need arises.
But there are also some smaller details that need to be covered:
- Details of insurance policies
- Family history and health records
- Medicare numbers
- Debts and regular payments
- Income including pensions, social security, dividends, interest and annuities
- Savings and investments including bank account numbers and names of financial institutions
- Tax returns
- Location of safety deposit boxes and keys
- Names and phone numbers of legal professionals, doctors, accountants and financial advisers
There’s no doubt talking to your parents about their finances can be a sensitive issue. But in the end good communication will give them a lot more dignity and control over their finances and help you avoid stress and bad decisions in a crisis scenario.
An ipac financial adviser can help you ensure all the bases are covered and can act as an objective third party to help you avoid family squabbles.