Helping Your Parents Plan for Financial Wellness
When we think about advice from our parents, every generation has its own unique way of imparting their wisdom to their children. My grandma’s advice for health was whisky and lemon juice. It did get her to a vibrant 96 years of age. I’m still a fan of that sage counsel, but also recognize that my generation, and those following, are faced with looking for advice in terms like "long-term care" or "disability insurance." Health and finances are now intertwined topics in planning for our overall wellness. They're also a necessary part of the discussion with parents as they get older.
Read Part 1: Estate Planning for Your Financial Wellness
Read Part 2: Planning for a Divorce
The conversation with your parents as they age is tough for many. When I lost my father last year, we were as ready as anyone could be, and even then, it was tough when he passed. What helped my family was having conversations about what to do during an illness, or what happens in the event of a death. The roles where children become advisers or caregivers are uncomfortable. It's easier to say "we'll take care of it later if it happens." But planning today when everyone is healthy both physically and mentally, makes it easier for the future of when (not if) a complication arises.
The most critical first step is to schedule an actual meeting with your parents to review their financial assets and ensure you have a comfortable understanding of where things stand. If either of you is unsure after the discussion, schedule time with a financial adviser where you can, and should, ask questions. The following is a list of often-overlooked topics, but I recommend you include in financial wellness discussions with your parents.
Identify a trusted person who will have access to view transactional information from your parent’s financial accounts. This person is typically a family member, whose primary purpose is to raise the alarm if something seems out of the ordinary. While we don’t ever think it will happen to our parents, retirees or those near retirement, are too often the target of fraud. The SEC and FINRA both have dedicated resources that you can use to educate your parents on avoiding retirement scams. Having another set of eyes can also help identify a potential hack, and can be a resource to help parents undo the damage from the hack.
Decide who will oversee the accounts during an end of a life event or major surgery. Choosing a trusted adviser outside the family circle is recommended. It allows children to focus on a parent's health needs or focus on the family when grieving. You can also ask a financial adviser or wealth manager to electronically store documents for safekeeping and retrieval during times of need.
Identify long-term care needs. With the average life expectancy for a male to be 84 years and 86.5 years for a female, your parents will likely need enough savings for long-term care. Long-term care can be anything from home care for meals or care for a severe health condition or disability.
Have a plan for probating the will. When a person dies, “probate is the process in which court legally recognizes a person’s death and oversees the payment of a deceased person’s debts and the distribution of his or her assets.” It’s not an easy or painless process that you want to learn about as you’re grieving the death of a parent.
The tenants of constructive communication across all generations include being open, and while it may be tough at first, the hard topics get easier the more you discuss. I encourage you to start a conversation with your parents now. It will also make it easier when it’s your children doing the same for you. Lastly, if you only do one thing for your parents’ financial wellness this year, know where the important documents are located.
*** Disclaimer: The information provided is for educational purposes only. The views expressed here are those of the author and may not represent the views of BFT Financial Group. Neither BFT Financial Group nor the author makes any warranty or representation as to the accuracy, completeness or reliability of this information. Please be advised that this content may contain errors, is subject to revision at all times, and should not be relied upon for any purpose. Under no circumstances shall BFT Financial Group be liable to you or anyone else for damage stemming from the use or misuse of this information. Neither BFT or the author offers legal or tax advice. Please consult the appropriate professional regarding your individual circumstance.