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YOUR PARENTS' FINANCES AND ESTATE PLANS: How to talk the them about both.

How to talk to them about both.

It is essential as your parents' age, you have conversations with them about their finances. To broach the topic, you might bring up current events like the coronavirus pandemic, its effect on economic conditions, and how it relates to the security of their financial future. The conversation should come from a calming place of love and concern. Speak to them respectfully about how the coronavirus pandemic has you thinking about the importance of their planning and preparedness.

Once you begin the conversation, move away from the pandemic as your introductory technique because you do not want to create a sense of panic or fear. Instead, delve into legal and financial reviews, processes, and parameters. You can reference a recent US News report discussing how your parents’ financial analysis should include essential legal documents, financial accounts, and associated vital contacts, long-term care decisions, and claims. Even if you live apart, you can still lay the groundwork to help them with their finances remotely.

It is generally most comfortable to begin your conversation with legal documents that hopefully your parents already have in place like a will, trust, living will, and a health care proxy. If your parents do not have these documents, advise them of the importance of retaining an experienced estate planning attorney and creating the estate plan for their needs. An essential document of your parents’ estate plan is or will be the Durable Power of Attorney. If you need to help your parents manage their finances, you must have a Durable Power of Attorney. A Durable Power of Attorney allows you to make financial decisions for your parents in the event they become incapacitated. This is an essential estate planning document. In the absence of a Durable Power of Attorney, the courts become involved, and solving health or financial issues becomes a lengthy, expensive process over which you have little control. If your parents already have their legal documents drawn up, find out where they keep them and review them carefully. If any documents need to be amended, suggest your parents meet with an experienced estate planning attorney to make the relevant changes. Be sure their documents reflect the state law in which they reside.

Once you have assessed your parents’ legal documents, it is time for some financial discovery. Even if your parents do not currently need help, having an overview of their finances and a Durable Power of Attorney to help them in the future is crucial to their aging success. Begin by listing all of their accounts, account numbers, usernames, and passwords as well as employee contact names. Include insurance policies, the agent's name, and where the policy is, as well as how they pay their premiums. Include any online medical accounts or list their doctors’ names and office numbers. The idea is to create a comprehensive list of all of these accounts. Gather your parents' Medicare and Social Security numbers and their drivers' license numbers. Know where they keep this information so in the future you will know where to look. Also, learn about any online bill paying or automated, re-occurring activity. These usually include monthly bills like electricity, natural gas, water, etc. but may also include quarterly payments or annual subscriptions. It is also important you consider and review the finances assuming either parent is a surviving spouse. Consider what the finances look like without both incomes and what needs to be done address any gaps or shortfalls.

If your parents still live in their long-time home, discuss if it is viable for them to live out their days there, or if downsizing to a retirement community or moving closer to where you live appeals to them (admit it, for some of you, the thought of your parents living closer to your just made you cringe—see Everybody Loves Raymond). Help your parents come to a decision about what is best for their set of circumstances, but be honest and do not make promises you cannot keep. If they do not have long-term care insurance or some other mechanism to aid them in times of need, talk about the topic, and try to come up with a solution. If they have long-term care, be sure you have a copy of the policy, contact information, and the name of the insurer and agent. Review the requirements for receiving benefits so you can help them when they need to file a claim as most policies have a waiting period of 30 to 90 days before benefits begin. Know what to expect.

Digital technology has made oversight of parents and their finances easier than ever as long as you have a Durable Power of Attorney and access to their account information. If they do not yet pay their bills online, or use auto payment, help them set up this option for their monthly bills. Remind them you will provide oversight to ensure proper billing. Offer to help them with their annual tax filings. Your help relieves some pressure on them and provides you with information about the goings-on in your parents' accounts. For your parents' peace of mind, you can establish a monthly video chat to let them know their bill payments are progressing normally. Your involvement will allow you to identify any abnormalities in account activity, which may indicate scam attempts.

Having these financial and planning conversations with your parents today can help them live more securely and with less stress as they age. Most parents will try to avoid these discussions with their children because they may not be adequately prepared for what can lie ahead. Conversations that focus on proper legal documents and gathering financial account information will give you the data you need to help protect your parents.

A final and very important point. This is very easy if you are the only child, but according to rumor, there is this thing called sibling rivalry and I have been advised it can be a real mess (I am the eldest of four, please forgive the sarcasm). It is absolutely vital the siblings discuss and agree about who will handle these matters and who will be assigned what responsibilities. Organizing the roles and responsibilities among yourselves may take the pressure off your parents by relieving them of having to choose among their children and worrying about hurt feelings and disgruntled children. But remember, just because you and your siblings agree does not necessarily mean your parents will agree. It is their decision who will manage "their" finances and who make "their" medical decisions.

We would be happy to help you and your parents with critical planning documents. Despite COVID-19, we are open and taking still serving clients, and we hope to talk with you soon about your particular needs. Please call us at 301.892.2713 or click here to schedule a consultation to discuss how we can help you and your parents.

“Living with your bags packed!”


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