Introduction: At some point in
time, the roles reverse and the child starts worrying about the
parent. Since my wife’s and my parents are gone, I guess we have
completed that journey. Now, sooner or later, my children will start
on that journey with us. And that got me to wondering—just how does
one open that conversation with one’s parents–it certainly isn’t an
easy thing. And what should the children be worried about.
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What Do You Want to
Accomplish: It starts with finances and it ends there.
Basically, can they afford to continue to live in their present
lifestyle? That means healthy or ill, is there money or insurance
there to take care of them? [Back to Top of
Article]
Getting it Started:
Oftentimes, the parent will indicate that they want to discuss this
subject. In my case, my mother-in-law mentioned that she didn’t have
enough to do what she wanted. Of course, I’m an attorney so maybe
that invited her inquiry. But if your parent brings up the fact of
large bills (maybe medical or otherwise), investment losses, or
wonders aloud how he will pay for the new car, this can be an
invitation. Don’t miss it! [Back to Top of
Article]
But even if no invitation is made, you can inquire whether your
parent suffered any investment losses in the recent recession or
whether he has thought about how he will replace the car. That
should get things going. [Back to Top of
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Living Expenses: You want to
make sure that with social security, retirement pensions, and
investment income there is enough to handle the monthly living
expenses. And don’t forget that sometimes some things need to be
replaced (car, appliances, etc). So include the replacement cost of
these things in the living expenses (cost to purchase new/useful
life). If there isn’t, and mom or dad is drawing out from principal
to make ends meet, this is a potential warning sign. It might be
alright, but it might not. And if you are not equipped to analyze
this, you are probably going to need a financial planner to help.
One further thing I learned is that you can’t just go through the
checking account register to see where the money is going. You must
also go over the monthly credit card statements. It is amazing what
you can find. With my mother in law I discovered that she was paying
several hundred dollars a year to a charity on an automatic basis.
Further, she had purchased an extended warranty on her car. Every
month there was a charge on her credit card statement for this.
While I may not be a fan of these warranties, others are. But in her
case, the manufacturer’s warranty had several years to run when she
purchased the car. The extended warranty kicked in several months
after she sold the car. Apparently a salesman had called her a week
after her purchase (she had turned down this option at the time of
purchase) and convinced her to buy it. So, all in all, there was an
approximate 20% reduction in her monthly income based on these two
items. [Back to Top of Article]
Health Insurance: You want to
determine whether your parent has enough (or maybe too much) health
insurance. Remember, it is not free. The monthly premium on these
policies is being paid out of savings or reducing the amount of the
pension payment. If there is too much insurance, then the money your
parent has to use is being wasted. If not enough, then your parent
probably needs to purchase some type of Medi-Care Supplement policy.
In my parents’ case, they had way too much. But before we made the
decision to cancel a few policies, we requested the aid of a health
insurance agent. [Back to Top of Article]
Long Term Care: There is
insurance for this. It covers such things as Skilled Nursing
Facility, Assisted Living Facility, and In Home Care. Is any such
insurance in force? Can your parent purchase any at a reasonable
price? Sometimes this insurance is available through organizations
to which your parent belongs. But keep in mind, this is complex
stuff. I have a background in financial planning and insurance and
have a reasonable understanding of this type of insurance. When I
tried to analyze what was available to me through my trade groups, I
was overwhelmed. So I bit the bullet, called in an insurance agent
who handles this product and let him break it all down for me. Yes,
I probably paid more for what I bought than if I had simply
purchased the policy being offered by my trade group, but I know
that I obtained the right policy and options for me. That would not
have been the case had I bought through my trade group.
If no such insurance exists or can be purchased, then you need to
consider whether your parent will be eligible for the Veterans Aid &
Attendance Non Service Connected Disability Pension (Surviving
Spouses are also eligible) or Medi-Cal. And even though they may not
need long term care now, they need to be able to qualify in the
future, if necessary. This means that their estate planning
documents have to enable this capability. This is a service that we
provide constantly, so feel free to call us.
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Estate Planning: Does your
parent have a Will, a Trust, or a Power of Attorney? Is it up to
date? When was it last reviewed? These are all valid and important
questions and can save your parent’s loved ones (i.e. you) 10's of
thousands, maybe even 100's of thousands of dollars.
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How to Handle It: My
suggestion is that you make it a team effort. Remember, most people
don’t want to give up control if they can help it. If they feel you
are taking over before they are ready, that will probably doom the
entire project. You are concerned about your parent and want them to
be happy and comfortable. And to accomplish that, you and your
parent need to get a handle on the financial data and, maybe, have
it looked at by some experts.
For example, when I discovered the money that was going out by the
automatic credit card charges, I did not get upset, at least not
when my mother in law was around. So don’t you, either. Just discuss
the issue with your parent and ask them what they think about it.
Most of the time they are going to come to a very rational decision.
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Other Resources: The University
of California has a pamphlet on this subject that you may want to
review. Communicating with Your Parents about Finances Or just do a
Google search on the topic. [Back to Top of
Article]
