A Checklist for Talking to Your Parents About Their Finances

A Checklist for Talking to Your Parents About Their Finances

There’s a good chance you will have to get involved with your parents’ finances as they age. As their financial decision-making ability declines with age, they might need you to help protect them from scams and fraud. They might need you to manage their money for them if a health issue leaves them unable to do it themselves. Or they might turn to you for financial support if they haven’t saved enough for retirement or planned for the high cost of long-term care.

In fact, it’s not a question of if but when your parents will need you to play a role in their financial lives. However, if you wait until they need your help to start talking with them about their finances, you could run into big problems.

Your parents might not have the legal documents in place to allow you to step in and help. You won’t have a plan for dealing with the emergency. And emotions will be running high. You and your parents won’t be thinking rationally, and the last thing any of you will want to discuss are finances.

The question, then, is how to have family money conversations to prepare for those emergencies before they happen. After all, talking to your parents about their financial situation can seem downright daunting.  

For starters, these discussions likely won’t be as difficult as you think, especially if you have a game plan. This checklist will walk you through the process. Then you’ll have peace of mind knowing that you have the information you need when you do have to get involved with your parents’ finances.

Step 1: Talk to your siblings

You might be thinking that talking with your parents about their finances is tough enough. So why add another layer of complication by talking to your siblings first? Because if you don’t, it might cause resentment. You and your siblings need to get on the same page.

To do that, start by figuring out who will initiate the money talk with your parents. Maybe it’s all of you or just one of you. Also discuss what roles you’re willing to play in your parents’ lives as they age. Then when you do talk to your parents, you can let them know how each one of you wants to help. This might make it easier for your parents to talk with you because at least they’ll know you are (hopefully) willing to work together.

Step 2: Choose the right time to talk

Conversations with your parents about their finances can happen naturally. But even if you are able to broach the topic casually, you should set a time to have a more in-depth discussion – or a series of discussions – with them to gather details about their finances.

That time should not be during a holiday gathering – even if it’s the one time of year that you, your parents and siblings are together. There could be people there who don’t need to be a part of the conversation. And if someone has had too much wine, the conversation could go downhill real fast.

It could take several attempts before your parents understand why you want to discuss their finances with them and are willing to open up to you.

At least wait until the day after a holiday meal to let your parents know you want to talk to them about their finances. Ask them what a good time would be for them to sit down with you to have the conversation, then make it a date to talk.

Step 3: Have a plan for starting the conversation

Before trying to talk to your parents about their finances, decide what approach you want to take to get them to open up. If you have a good relationship with them and money is not a taboo topic in your family, simply let them know that you want to gather some information about their finances to be prepared in case of emergencies or to give you peace of mind.

Otherwise, you could use any of these indirect approaches to get your parents comfortable with the idea of discussing a topic they might consider off-limits:

  • Use a story about someone you know who had to get involved with a parent’s finances to highlight the benefits of being prepared or the problems the family encountered because they hadn’t had money talks beforehand.
  • Ask your parents for advice with a financial issue you’re facing. Their response will give you clues about the financial planning they have or have not done. Keep the conversation going by asking more questions about what they’ve done to stay on top of their finances.
  • Ask about ‘what if’ scenarios, such as how you would make sure their bills were getting paid if they were in the hospital for a while. This will highlight the need for planning and, hopefully, prompt them to share the information you would need to help them in case of an emergency.

[ Read: How to Speak So Your Parents Will Listen ]

Step 4: Remind yourself to be calm and respectful

Knowing what not to say to your parents when talking about their finances is just as important as knowing what to say. Don’t be condescending, don’t appear to have selfish motives, don’t issue ultimatums and don’t use language such as “you should” that could put your parents on the defensive. Remember, if it seems like you’re trying to be controlling or have selfish motives, your parents won’t want to talk with you.

Step 5: Get a third party to help with reluctant parents

Your parents might be reluctant to share information about their finances with you for a variety of reasons. One of the biggest can be that they still think of you as a child and don’t want to take advice from their child. For that reason, they might be more receptive to requests from a third party to talk with you.

You could reach out to financial or legal professionals they work with and ask those people to encourage your parents to share some information with you. You could ask for help from a clergy member, a family member or a trusted friend of your parents. Or your spouse or partner might have more luck getting through to your parents than you.

You also could hire an aging life care expert to help facilitate a conversation if your parent already is having issues and you need to get involved quickly. You can find one through the Aging Life Care Association.

[ Read: 5 Ways to Get Reluctant Parents to Talk About Their Finances ]

Step 6: Gather information

The point of talking to your parents about their finances is to gather as many details as possible. You don’t have to do it all at once. It can happen over several conversations. If your parents are reluctant to talk, try to at least gather this basic information:

Do they have estate planning documents? Find out whether your parents have a will or living trust as well as power of attorney and advance health care directive documents. It’s especially important that your parents draft and sign power of attorney and advance directive documents before they have any issues that make them incompetent – such as a stroke, dementia or coma. These documents allow them to name someone to make financial and health care decisions for them if they are unable to do so themselves. If something were to happen to them and they didn’t have these documents, you or your siblings would likely have to go to court to be appointed their conservators or guardians to make financial and health care decisions for them.

It’s especially important that your parents draft and sign power of attorney and advance directive documents before they have any issues that make them incompetent – such as a stroke, dementia or coma.

How do they pay their bills? Getting an answer to this question will help in case of an emergency. Find out whether bills are paid automatically, or if your parents write checks. If it’s the latter, find out whether they’ve named you or someone as power of attorney to sign checks for them. Also offer to help them set up automatic bill pay to make it easier in case something does happen.

If your parents are willing to share more information, ask about what their sources of income are, what sort of insurance policies they have, whether they have debt and what their final wishes are. You could ask them to make a list of all of their financial accounts, usernames and passwords, Social Security numbers, Medicare or Medicaid numbers, and locations of property deeds and titles. The more information they can share, the better prepared you’ll be to help them as they age. They can store the list someplace safe and tell you when and how to access it.

[ Read: The Ultimate Guide to Power of Attorney ]

Step 7: Discuss long-term care plans

During your money talks, find out whether your parents have a plan for long-term care if they ever need it. Medicare does not cover the cost of long-term care, and the median annual cost of care can range from $19,500 for adult day care services to $102,200 for a private room in a nursing home, according to insurance company Genworth.

If your parents don’t have a plan, they could be counting on you to care for them. This will impact your finances because you might have to take time off work or even quit a job to provide that care. If possible, encourage your parents to look into long-term care insurance or meet with a financial planner to figure out if they can afford care on their own.

Your parents can find a long-term care insurance broker through the American Association for Long-Term Care website. They can find a financial planner through the Financial Planning Association’s member directory at PlannerSearch.org or the National Association of Personal Financial Advisors’ directory at NAPFA.org.

Step 8: Don’t get discouraged

Your parents might not want to share details about their finances the first time you try to talk with them. They might change the topic. They might tell you that their finances are none of your business. But the truth is that they are if you ever have to step in and help your parents out – or deal with what they’ve left behind when they’re gone.

It could take several attempts before your parents understand why you want to discuss their finances with them and are willing to open up to you. Keep trying different approaches, and, hopefully, your parents will recognize how important it is to you to have this conversation.

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