If you’re like most younger people, you probably have lots of your own money worries, from how to pay off student loans to how you’re going to save in an emergency fund. As you focus on your financial life, there’s a big elephant in the room you’re probably not seeing: your parent’s financial situation.
You might think you’ve got years to figure it out, but the problem with waiting is you never know how much — or how little — time you actually have before health or other problems rear their heads. “I often get contacted after a parent has lost the ability to manage their own finances,” Roman Aminov, a New York City estate planning and elder law attorney, said in an interview. “I’ve seen the troubles that people face in that situation.”
These troubles can range from parents who don’t have money to pay for nursing home care, to not being able to find assets when parents become incapacitated, to family infighting about a parent’s estate.
“A lot of my experience involves dealing with the children of parents who didn’t have that conversation when they should have.” Aminov said. “This means we’re dealing with family fighting, with lost time and energy trying to find assets, with confusion over why the parents took the actions they did.”
Don’t let yourself be one of those kids who didn’t have the conversation. Instead, follow these tips to have “the talk” while your parents are still healthy and can work with you to make a financial plan for the future.
Find the right way to broach the subject
It’s really uncomfortable to talk to mom and dad about money, and you may feel like it’s none of your business. But your parents finances can affect you big-time — especially if they ever get into financial trouble and find themselves needing to live in your guest room.
One option for bringing up financial issues: If your parents bring up money, expand the conversation. “I usually try to wait until my mom asks me my opinion on money matters such as buying a new car, what she should do about her retirement and credit card stuff,” Jackie Lam of Cheapsters.org suggested to Lifehacker. Broaden the subject to address their bigger financial picture whenever you get the opportunity.
You can also start with a story or share your own situation. Talk about how you met with a lawyer to make your own will (a good idea, especially if you’re starting a family of your own) and ask if your parents have a plan in place. Or maybe share a story you read in the newspaper about how seniors are being targeted for scams in order to broach the subject of how your parents are managing their money, Kiplinger suggested.
Enlist outside help
Parents are often very reluctant to talk about money with their kids or — in some cases — to talk with anyone. “There’s a bit of an ostrich syndrome,” Suzanne Schmitt, vice president of family engagement for Fidelity told the Chicago Tribune. “They are desperately afraid of losing control over how they spend on their own. They can’t cope with losing that independence.”
Parents may be more willing to open up if a professional makes the suggestion. Asking their doctor or geriatric care manager to speak to them could prompt them to have a financial conversation with you, according to Kiplinger.
If your parents make clear they don’t want to talk about their finances to you, prompt them to go to an outsider who can offer the advice they need. An estate planning and elder law lawyer is a good resource to plan for nursing home care costs and to help parents make a legacy plan. “I’ll sit down with someone, they’ll fill out forms and tell me where assets are located, they’ll put down account numbers sometimes. It is helpful for children when it comes time to implement their parent’s plan,” Aminov said to Mic.
If you’re worried about whether your parents are in debt or about whether they have enough retirement savings, research credit counselors or financial planners and get your parents to make an appointment with a trusted person you’ve found who can assist them if they won’t let you help.
Know what issues to raise
If you suspect your parents are having trouble managing their money or don’t have enough cash to live comfortably, offer to help them with a spending plan, Kiplinger suggested. This can help them make wiser spending choices and allow you to learn more about how their money is being managed.
You also need to know where your parents wealth is in case something happens to them. “When I probate wills, children will come in and say, ‘I know mom had some assets, I know my dad had a bank account, and I don’t even know where,’” Aminov said. “The reason is, it was never communicated. It wasn’t written down anywhere. Now they have to hire a private investigator just to be able to put together the pieces of an estate they are responsible for managing.”
Nursing home care is another big issue to discuss. About 70% of people who reach age 65 will need some kind of long-term care for at least three years, according to PBS. This costs thousands of dollars monthly. Medicaid is a primary payer of long-term care services — Medicare typically doesn’t cover these services — but don’t assume financial troubles are over if your parents get Medicaid because the state can take assets of Medicaid recipients after death.
“I’ve seen situations where a parent has received Medicaid services and passes away. The child will come in and after we open up the estate, they’ll be surprised that their mom had Medicaid. The practical ramification is that Medicaid has a right to put claim on a parent’s estate,” Aminov said. “In one case it was a quarter million dollars. The estate of the parent owes back the money and the estate is now subject to Medicaid recovery, all because the parents didn’t disclose that to the child.”
Remember that long-term care is expensive, and typical annual costs of a nursing home can exceed $80,000.
Focus on the benefits to your parents
When you broach the money conversation with your parents, make sure you stress how talking about financial issues can benefit them.
“When I’m sitting down with people and talking about their legacy, their assets and the values they want to impart to their loved ones, a lot of it is kept inside and bottled up, be it financial or emotional issues,” Aminov said to Mic. “Parents want peace of mind.”
You can give that to your parents by helping them to make plans for their financial stability and their future legacy — or at least by convincing them to get help from experts who can help them to put their plans in place. Try to keep the tone constructive and loving, and with luck, you’ll be able to get on the same page.
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