The older our parents get, the more important it is for us to know more about their finances. Rick Emerson, author of Zombie Economics," stopped by to give us help in starting the conversation and getting the right information from it too. For more information about Rick and his book, click here.
1) Don't delay
It's important to remember that parents -even yours- are just like anyone else: they forget, postpone, delay, and avoid. And, like the rest of us, they often feel a lot younger than they really are. The end result? They may not have thought through the sometimes-pressing issues regarding their finances...which means that further procrastination is a very bad idea.
Express your concern in terms of "doing the right thing" for your parents; if need be, you can even paint yourself as being a little disorganized...whatever gets them to meet you halfway.
However awkward an early, initial conversation might be, you'll be spared the additional pressure that comes with waiting too long; a sudden emergency or financial crisis is the worst possible way to learn about your parents' financial situation.
2) Use the Parent/Child Dynamic to your advantage
Rather than telling older parents what they ought to do (because we all know how well that goes), use your own situation as an example. Relate your own experience of having a will prepared, or of figuring out your health-care costs. And, when possible, ask your parent(s) for their input or suggestions on these subjects. Remember: the goal is to get them thinking about health-care costs, living wills, and other such priorities. Let them function in the familiar "parent" role, and it becomes much easier to steer the conversation toward topics that are mutually important.
If you have siblings, make sure you're all on the same page. Often, there's one sibling who's best able to broach sensitive topics within the family; another may be more detail-oriented. Figure out the best way to handle each part of this dynamic and divide the work accordingly. (And, if you come from a big Catholic family -like I do- this also means dividing the guilt.)
3) Ask a "third party" for help
It's easy for parent/child conversations to quickly become power struggles...at any age. If your attempts at discussing financial matters are going nowhere, consider asking a trusted friend or other "outsider" for their assistance. Often, older parents will be more receptive to questions or suggestions that come from a professional. (And sometimes, it's not even a financial professional; my grandmother implicitly trusted her next-door neighbor...because he was a dentist.) Your parents' doctor, lawyer, or church leader will, in all likelihood, have dealt with similar situations before; the important thing is to start the conversation...one way or another.
4) The info you need...and where to keep it
Over time, many couples will divvy up the financial duties (one pays the bills, the other handles investments, and so on.) As the years pass, it becomes more important for both parties (as well as their family) to understand "the whole picture"...or to at least know where to look.
In addition to basic financial and banking information, other important data includes: living wills/living trusts, health-care directives or instructions, contact info for parents' attorneys/doctors/church leader, etc. Even basic info, such as Social Security numbers, should be included in a secure (but centrally-accessible) location.
In general, do not store important info or documents in a safe-deposit box; opening these (even for relatives) often requires a court order, which can mean lengthy delays.
For easier access, consider a fireproof strongbox. Even better: keep a duplicate, encrypted copy of important documents online. Services such as LegacyLocker.com will, for a small fee, provide secure online storage, meaning that siblings and other relatives can more easily access necessary data.
5) When it comes to your parents' insurance policies...get the details.
This is something my wife and I are currently dealing with. Though her father had insurance, he didn't leave much indication of who the policies were through. And believe it or not, life insurance doesn't automatically pay out if the policyholder passes away - the company has to be notified. If the family doesn't know about the policy, or doesn't know which company it's with (and there are thousands), it can take weeks or months to figure out.
Even worse, once the policyholder dies, the insurance company will sometimes use the benefit money itself to keep making the payments. So, if you have life insurance, make absolutely sure that your family or attorney knows about it, and knows the details. It will save everyone time, stress, and money.