Talking finances with your elderly parents

As your folks get on in age, you may find yourself concerned about their financial situation. Your concern is well-founded. Neglecting to plan for a loss of autonomy and estate issues can have significant repercussions on them and the family, including you and your siblings.

When is a good time to bring it up?

Planning ahead is key here. Discussing your parents’ finances while they are still in good health and autonomous will give you more time to plan and see to all the aspects.

More to the point, your parents are likely to have more options than if they start losing their autonomy and before a sense of urgency guides their decisions.

Then it’s a matter of picking the right moment to initiate the discussion. It’s better when things are calm rather than a more stressful time like a family celebration for instance. If you can, make sure that your parents are receptive to a discussion and not preoccupied by other matters such as awaiting the results of a medical test.

There is no point upsetting them or forcing them to engage in a conversation about money if you don’t have their full attention.

A few signs to watch out for

If your parents are having trouble managing their finances, don’t wait until they ask you for help. They don’t want to be a burden.

So it’s up to you to watch out for certain telltale signs like unusual expenses, missed payments or progressive loss of memory.

Then you know it’s time to take the bull by the horns and act.

How to talk about it?

Money, loss of autonomy and death are taboo topics. A delicate touch and a good dose of respect are essential to keeping your relationship on track with your parents.

If you bring up the subject by putting yourself in their shoes and by sharing your concerns with them, you stand a better chance of not offending them.

Explain to your parents that you’re asking questions only because you want to make sure they are okay and that you want to help.

Failing to meet their financial obligations or feeling as though they are passing on heavy financial responsibilities can cause anxiety, disappointment and even anger. This means you must assist your parents in their efforts and even consider asking a financial services or legal expert for help.

One way or another, the roles are about to be reversed between you and your parents. It is therefore normal that certain adjustments will have to be made, but with transparency and communication you’ll get through it.

What should you talk about?

• Are your parents well aware of the expenses involved in a death? Aside from funeral expenses, there’s income tax to pay on the estate, outstanding mortgages, loans, etc.
• Do they have a will?
• Do they have life insurance?
• Are your parents aware of the cost of housing for seniors or home care if they lose autonomy? Given that people are living longer, they might not be able to afford expensive housing for a long stay …
• Do your parents have a power of attorney (or protection mandate in Quebec)?
• Do your parents have confidence in their financial plan and their capacity to pay their bills?
• Do your parents have an advisor to help with their finances?

What can you do if they are overwhelmed?

1. Sort out their paperwork

The first step is to gather together their important documents:

• Statements of income
• Life, health or group insurance
• Investment statements
• Bank statements and other information like their PINs
• Mortgage contract
• Will
• Birth certificates
• Marriage certificate or other related documents

And don’t forget their social insurance numbers.

If your parents have a safe or safety deposit box, get all the information you need to access them.

2. Draw up their financial inventory

You have everything you need to draw up a financial profile for your parents:

• Sources of income
• Monthly expenses, like mortgage payments, cable, etc.
• Credit cards
• Monthly budget
• Assets and liabilities
• Investments
• Insurance

3. Acting on their behalf

If your parents aren’t able to handle their affairs, you’ll need a proxy or power of attorney (or protection mandate in Quebec) to act on their behalf.

The difference between the two documents is your parents’ capacity to manage their affairs. A proxy give you the right to represent them even if they can still act on their own behalf, whereas a power of attorney designates you as the only person with the authority to act because your parents have been declared incapacitated by the courts.

4. Get them a lawyer or notary

It is essential that your parents have a notary they can trust, especially if they haven’t prepared a will or power of attorney.

Your parents also have to let their loved ones and heirs know what to expect in the event of their death.

Misunderstandings can be avoided if they take the time to make a plan and share it.

5. Get help from an advisor

The world of finance is complex, which is why your parents and you will be well served by a certified advisor.

A financial advisor will help your parents with their financial planning and investments and give you the guidance you need.

Original post can be found on the SSQ Blog: https://blog.ssq.ca/en/finances/talking-finances-with-your-elderly-parents