BAM Intelligence

Seven Essential Questions to Ask Your Aging Parents

A few years ago, my mom was diagnosed with stage four Hodgkin’s Lymphoma cancer. This prompted some quick changes for our family, as we were not prepared for a medical crisis. The first priority was to find my mother the best medical care possible, which meant a sudden move from her cabin life in northern Wisconsin to Minneapolis (where I live) so she would have access to significantly more medical resources. My parents moved in with our family during the course of her six-month treatment plan, which was both a blessing and a challenge.

I am happy to report that my mother is doing well and has been cancer free for a couple of years. However, her health emergency underscored in no uncertain terms the importance of getting in front of medical and financial matters before it is too late. We were fortunate insofar as this was an opportunity to update her estate documents, organize her finances and get a long-term medical plan in place.

Now, as I work with clients, I make sure to ask about their parents’ health and finances. The most common response I hear, unfortunately, is that their parents don’t like to talk about money, that they are too private to discuss finances or that money was a taboo topic growing up.

Although it may indeed be an uncomfortable topic, it’s important to have a productive conversation with your parents before a medical emergency or financial crisis arrives. This includes thinking about the right time and place for an open discussion. For example, I would avoid the holiday season, because added stress at that time of year may not lead to a productive meeting. It might mean coordinating with your sibling(s) to determine who would be the best family member to lead this effort, or whether it should be a team approach. The conversation can start off with more logistical issues, but should then lead to deeper questions regarding the health of your parents’ finances and their medical plans, which could require multiple meetings. In general, it’s much easier to get organized and create a plan when your parents are in good shape rather than in the hospital emergency room. So, here are the top seven questions you should consider asking your aging parents:

1) Do you have key documents in place? Key documents include wills, durable powers of attorney and health-care directives. It is helpful to know the people appointed to act on behalf of your parents should something happen, and to understand why they were chosen. It is also important to know when these documents were last updated and where they are located.

2) When was the last time you reviewed the beneficiaries on your retirement assets and insurance policies? People too often spend time updating their wills only to forget to take the next step and update the beneficiaries on their retirement assets and insurance policies. The beneficiary information overrules what is stated in the will, so it is important to keep these up to date.

3) Have you created a list indicating how your personal items should be divided? This can be as simple as a handwritten letter that details the personal items to be gifted and the name of the person to receive each one. The list should include sentimental items that your parents would like to see given to certain family members or other important people in their lives. A little planning ahead of time can prevent hard feelings among siblings.

4) Who are the key advisors in your life? The list of key advisors should include your parents’ financial planner, attorney, accountant and insurance agents. The first step is to identify who these people are, and then see if it would make sense (and if there is openness) to having a joint meeting. At my firm, we often host family meetings that include the parents and their grown children. The meeting doesn’t need to include every detail and number to provide a sense of comfort about the state of your parents’ finances, but it should communicate the overall structure.

5) Have you created a letter of last instructions? This is not a legal document, but it should include a detailed list of helpful information, such as all of your parents’ assets and liabilities, insurance policies, key advisors, credit card numbers, contact information for friends and family, the location of key documents (birth certificates, social security cards, marriage papers), the location of any safe deposit boxes (including where the keys are kept), information on any burial plans already in place, and wishes for their funeral. Also, in our modern world, this should include a plan to share user names and passwords to access key accounts and subscriptions.

6) Do you have enough resources to cover your retirement income, housing expenses and medical charges? Address how long your parents plan to stay in their home, what options are more (or less) acceptable to them throughout various stages of the aging process, and if they have the resources available to afford those housing plans. It is also important to ask the difficult questions about future medical care, including long-term care policies.

7) Who is notified if insurance payments are missed? Make sure that key insurance policies have a backup point of contact that will be notified if a payment is not made. I heard a tragic story recently about an individual who lost their insurance when they needed it most. After years of paying for a long-term care insurance policy, there were unplanned payment lapses due to poor financial decision-making, or that may have resulted from cognitive impairment. Aging individuals, for instance, could forget to pay their premiums or no longer understand the potential value of their policies.

Regardless of how open your family has been about money matters in the past, some of these questions may stretch beyond your personal comfort level. It’s important, though, to focus on creating a productive conversation despite the emotional discomfort. Being honest about the difficulty of raising these questions is a great start to forming a common bond, which can be reaffirmed by reiterating that the conversation is designed to benefit your parents and support the achievement of their post-retirement goals. Moreover, future generations will experience additional benefits through a smooth transition of values, priorities and assets.

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The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.

© 2016, The BAM ALLIANCE

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Kathleen Longo, Flourish Wealth Management, Minneapolis, MN

Kathy Longo brings over 20 years of expertise and experience to Flourish Wealth Management. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.

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