Honor Thy Parents

The increase in life expectancy in the United States has led to an unexpected consequence—the emergence of the “sandwich generation.” This term, which first appeared in 1987, describes adults who care for both their children and their aging parents.

If you’re a member of the sandwich generation, you know that one day you’ll have to talk to your parents about their money. Perhaps you are dreading that day. No matter how old you are, you may still see yourself as a kid, not a peer. Your parents may feel the same way and they could be uncomfortable talking to you about money, wills and cemetery plots.

As your parents age it becomes increasingly important that you start this conversation and keep it going, no matter how awkward it proves to be. As with all financial matters, the two best words of advice I can give you are: Start Now.

Break the Ice

Be direct and respectful and start small. For example, ask your parents for contact information in the event of an emergency. Then try to obtain the following in one or more friendly discussions:

Essential Records
Where do your parents keep birth certificates, deeds, wills, health and life insurance policies and tax returns? If they have a safe deposit box, safe or locked filing cabinet, obtain access.

Contact Information
This includes doctors, insurance agents, lawyers and financial professionals. Don’t forget the neighbors, who can be helpful if you live far away.

Financial Information
Which institution(s) hold their assets? What are the account numbers, online user names and passwords?

These conversations might be as helpful to Mom and Dad as they are to you. Becoming involved in your parents’ finances might help them refine their ideas and might also give you ideas for your own retirement.

Become Proactive

You can build on the basics of your parents’ situation to find powerful ways to help them. In particular, address these topics to assist and protect your parents:

Durable Power of Attorney
The financial power of attorney authorizes you to handle your parents’ money, from paying bills to distributing their assets according to their wishes. The health care power of attorney (also called a health care proxy) gives you the ability to make medical decisions when your parents can’t. You need both types. Without them, you could be facing a long, expensive and emotional journey through the court system.

Wills
Do your parents have a will? If so, have they updated it to reflect changes in your family or in the tax law? If not, help them find an estate planning attorney.

Medical Insurance
Do they have health care benefits other than Medicare? Long-term care insurance can help with at-home care or with an assisted-living facility or nursing home.

Protection from Fraud
Sadly, crimes against older Americans are escalating. Most victims are between the ages of 80 and 89, live alone, and require some help with either health care or home maintenance. You can help safeguard your parents by asking about undeposited checks, unpaid bills, unexplained transfers and abrupt changes in their will or other financial documents. These patterns might point to the influence of a person you’ve been unaware of, or to the onset of dementia or Alzheimer’s disease.

The Toughest Questions

No one likes to contemplate mortality, but at some point you and your parents will have to consider end-of-life issues.

Living Arrangements
Will your parents be able to care for themselves in their home without assistance? Should they be thinking about a smaller home, a retirement center, or an assisted living facility or nursing home?

Living Wills
You don’t want to guess about life and death when your parents are unable to speak for themselves. A living will (or an advanced medical directive) is a guideline for what life-saving measures your parents would like should they become seriously ill.

Put Yourself in Your Parents’ Shoes

Think of how you would want to be addressed if you were in their situation. Make your conversations a two-way street and not a confrontation. Even if your parents won’t involve you in their finances right away, if you keep the lines of communication open you will all come out ahead. Hopefully over time your conversations will help everyone involved create peace of mind. And peace of mind, in any financial calculation, is invaluable.