How to Help Your Aging Parents With Their Finances

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Author: Kimberly Lankford | March 31, 2020

As your parents get older, they may start to need help managing their finances. And the coronavirus pandemic may have you thinking more about your aging parents and their financial futures. It can be uncomfortable to broach the subject, but this can be a good opportunity to start talking about their wishes and what you can do for them as they start to need more help.

“What’s happening now is a great starting point for conversations with your parents,” says Cameron Huddleston, author of “Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances.” “You can use the current events to get your parents talking. You don’t want to do it in a way that is going to scare your parents, but you want to approach it out of love and respect and concern – saying that after everything that’s happening right now, it’s got me thinking about how important it is to be prepared and how important it is to plan. I’d love to talk with you about what sort of things you’ve done to be prepared.”

It’s the perfect time to ask where they keep information about their financial accounts, whether they have legal documents such as a power of attorney and health care proxy, and eventually where they’d like to live as they get older and any plans they have for long-term care. “Now is a really good time to get in the habit of checking in on your parents regularly and asking how they’re doing, and also working in those questions about their finances,” says Huddleston.

Asking your parents a few key questions ahead of time – even years before they need help – can make the conversation less intimidating and help you learn about their wishes. It also gives them more control over important financial decisions, so you aren’t scrambling around and wondering what they would want in an emergency.

Most people avoid these discussions. The Transamerica Center for Retirement Studies asked retirees how frequently they discuss their retirement savings, investments and financial situation with family and close relatives, and 46% said they never have these discussions, only 5% said frequently, and 49% said occasionally. “Given our current pandemic and the extreme uncertainty right now from a perspective of health, finances and life as we know it, now it is more important than ever to have those conversations,” says Catherine Collinson, president of the nonprofit Transamerica Institute and the Transamerica Center for Retirement Studies.

That approach worked well for Collinson’s family. When Collinson was in her 30s, her grandmother sat her down at the kitchen table and talked about her finances and estate plans. “She was such a planner and so proactive,” Collinson says. Her grandmother had done all the legal paperwork so Collinson could take over her checking account and be prepared to handle her finances if anything happened to her. The preparation made a big difference when her grandmother had a stroke a few years later. “The fact that she laid that groundwork made it so much easier for me to be able to step in and take charge – to have the legal basis to be her representative, and also having a clear understanding of her wishes. It was all documented,” says Collinson.

You can start by discussing the following topics with your parents:

Ask About Essential Legal Documents

A good way to start the conversation is to let your parents know about the legal documents you have and ask about theirs. If you end up having to help your parents with their finances, it’s essential to have a power of attorney. “Many people feel that the power of attorney is the single most important estate planning document because it allows you to appoint someone you know to make financial decisions for you in case you become incapacitated and you can’t do so yourself,” says Bernard A. Krooks, founding partner of Littman Krooks LLP, a New York law firm. “It’s something every adult should have, and hopefully you never need it.”

The power of attorney will also give you authority to deal with your parents’ financial institutions even if they just need some extra help. “You cannot access your parents’ bank account or write checks and make financial decisions for them unless you have a power of attorney,” says Huddleston.

Another important document is a health care proxy, which lets them choose someone to make medical decisions on their behalf if they’re unable to do so themselves. “It opens up the lines of conversations with doctors and medical practitioners,” says Collinson. “Especially when confronted with scary health situations, it’s really important to have an advocate.” They should also consider getting a living will or advance directive specifying their wishes for end-of-life care.

In the Transamerica study, 65% of the retirees said they have a will, but fewer than half have a power of attorney or medical proxy, advance directive or living will.

You can find basic forms through online services, or you can find an elder law attorney to draft these documents through the National Elder Law Foundation or the National Academy of Elder Law Attorneys. Even during this unusual time, when some clients can’t leave their homes, attorneys are still managing to find ways to get these documents completed.

“Many governors have passed laws allowing for electronic signatures during the pandemic,” says Krooks. “You can get this done by videoconference and the documents will be completely legal and as good as if you came into the office.”

The procedures vary by state. Harry Margolis, an elder law attorney in Boston, is doing some “drive-by” document executions for people who have medical issues and an urgent need to have the paperwork completed from their home. They send the documents to the client, and someone from their office will be in the car watching the client sign in front of their house and will then notarize the documents.

Gather Information About Accounts and Key Contacts

Even if your parents don’t need help with their finances yet, ask them to put together a list of their key financial information and contacts. This will give you a head start if you do need to start helping them with their finances, either temporarily or permanently. “You can ask your parents to make a list for you of their accounts, the account numbers, the usernames and passwords, their insurance policies, the name of their insurance agent, where the policy is, how the premiums are paid, their Medicare and Social Security number and their driver’s license number. Ask them to put it someplace safe and tell you where it is,” says Huddleston.

They don’t need to share the details of the accounts with you at this point, but they can just let you know where to find the list if anything happens to them.

“The more information you can find out about your parents’ finances, the better you’ll be if you have to step in and help them out,” says Huddleston. “Even if they don’t need help from you when they’re living, when they die you’re going to need that inventory of assets so things aren’t lost.”

Learn How to Help With Their Finances From a Distance

It can be more difficult to help manage your parents’ finances if you live in a different area – especially now that the coronavirus has made it difficult to travel and visit older loved ones. But technology makes it easier to share financial information.

Talk with your parents about how their bills would be paid if anything happened to them. Help them sign up for auto-pay services for regular bills, so they don’t need to worry about missing deadlines or mailing checks. If they do online banking, you can get access to their accounts and work together to pay the bills online.

If they don’t have online banking yet, you may be able to set up online access to their accounts from a distance through a conference call with your parents and the financial institution, says Margolis. “Make sure you have online access to your parents’ accounts, whether being named as a joint owner, under a power of attorney or as a co-trustee of a revocable trust,” he says. “It allows you to step in seamlessly if and when necessary, and it gives you the ability to see what’s going on with your parents’ accounts.” You’ll be able to see if they start having any problems managing their money, spot unusual activity and also help them avoid scams.

“You can offer to help do their taxes for them, which will also give you some insight into their financial situation,” says Huddleston.

Help With Long-Term Care Decisions and Claims

A more difficult – but important – question for your parents is where they’d like to live as they get older. Would they like to stay at home or move closer to family or live in an active retirement community? Have they thought about how they might want to receive long-term care, if needed? Knowing their wishes up front can help relieve some of the stress if they have an emergency and you need to help them find long-term care quickly.

Find out whether they have long-term-care insurance or other plans to pay for care. Many adult children don’t know whether their parents have a long-term-care policy that can help pay some of the bills for a nursing home, assisted-living facility or home-care worker. Get a copy of the policy and contact information for the insurer and agent. Find out about the requirements for receiving benefits, so you’ll be ready to help them file a claim if they start to have health issues that could qualify.

Most long-term care policies pay out if the insured needs substantial assistance with two out of six activities of daily living (bathing, dressing, toileting, transferring, eating or continence) or has severe cognitive impairment and needs substantial supervision, but some older policies have different criteria. Most policies have a waiting period of 30 to 90 days before benefits begin. Also find out about any special requirements for facilities or caregivers (some policies require home-care workers to be licensed and work for an agency, for example) and see if the insurer offers resources to help you find caregivers or facilities in the area that meet the policy’s criteria.

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