How to Talk Money With Elderly Parents

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BOSTON (TheStreet) -- Once upon a time, arguments with your parents were about how late you could stay up or why you wanted to wear that to school. As parents age, roles can reverse, though, and it's the kids who may be forced into the role of responsible realist.

Longer lives have meant added problems for those dubbed the "Sandwich Generation," baby boomers approaching retirement with responsibilities for their children as well as parents -- financial or otherwise -- resting squarely on their shoulders. Keeping tabs on aging parents can be a source of conflict.

With age, even the sharpest mind can dull and confusion can have disastrous effect on finances. Bills might go unpaid and needless items bought, and parents can become generally an easy mark for those looking to grab at their cash.

Perhaps the most emotional topic, and one likely to cause strife, is how to tell a parent living on post-retirement fixed income that they are no longer capable of managing their own money or that it is no longer safe for them to live on their own.

Recent research by Home Instead Senior Care, a network of professional in-home care providers, interviewed 1,500 U.S. and Canadian adult children of aging parents, asking them about their relationships with their parents, and how they handle discussing sensitive topics with these older adults. Among its findings: "Nearly one-third of adults in the U.S. have a major communication obstacle with their parents that stems from continuation of the parent-child role. The fact that many of these families still operate according to a parent-child model rather than a peer-to-peer one makes these conversations particularly difficult."

Among the advice offered in that study is: "Forget the baby talk."

"Remember you are talking to an adult, not a child," it suggests. "Patronizing speech will put older adults on the defensive and convey a lack of respect for them. Put yourself in your parents' shoes and think of how you would want to be addressed in the situation."

Complicating these discussions can be the onset of dementia or Alzheimer's disease, which can warp the intent of even the most well-meaning interventions. Aging parents, in turmoil over the recognition of their own mortality and loss of control, may even lash out at those trying to protect their money as only wanting to preserve a bigger inheritance.

Longer life spans mean retired parents also have more complex financial needs than ever before. Even before they start losing mental agility, poor money decisions can cry out for intervention.

More than 7.3 million older Americans -- one out of every five people over the age of 65 -- have been victimized by a financial swindle, according to Investor Protection Trust, a nonprofit organization devoted to investor education.

Almost half of those aged 65 or over got at least two out of four true/false questions wrong about basic investment knowledge. Among the questions the majority answered incorrectly were, "If an investment is registered with the Securities and Exchange Commission or state securities regulators, it has been reviewed to make sure it's safe," and "A very high rate of return is only OK as long as the investment is guaranteed or bonded."

As if fighting with your elders isn't enough to worry about, sibling feuds can also bubble to the surface.

Home Instead Senior Care estimates that 46% of primary caregivers in the U.S. say their family relationships have deteriorated because of "the unwillingness on the part of their siblings to help care for an ailing parent. "

"Senior caregiving can either bring families together or cause brother and sister conflict," says Dr. Ingrid Connidis of the University of Western Ontario, who took part in the research. "In some cases it can do both. These issues can be very emotional. Like all relationships, siblings have a history. Whatever happened in the past influences what happens in the present."

The study recommends siblings never fighting in front of a parent. Parents worry about being a "burden" to their adult children and seeing arguments can lead to anxiety and, in turn, more fighting.

Children can make the conversation with their aging parents easier by being prepared. Start the dialogue before matters take a turn for the worse. No one wants to anticipate a crisis, but be prepared by collecting documents you may need at some point. Among them: contact information for doctors, insurance agents, financial advisers, accountants and lawyers; copies of property deeds, insurance policies, birth certificates and wills; and up-to-date information on retirement savings and pensions, Social Security and health insurance or Medicare and Medicaid. A copy of a living will and health care proxy should also be kept on hand.

Ideally a child can convince their mother or father to hand over financial responsibilities when needed. A Living trust, for example, can appoint someone to carefully invest and manage assets if they can no longer do so.

A power of attorney can task a trusted person with other responsibilities, such as making health care choices and handling finances. Arrangement are best made by both parties before there is a need.

There are resources available to help in the interim. The Social Security Administration's Representative Payment Program, for example, provides financial management for Social Security and SSI payments if beneficiaries are incapable of doing so.

In a worst case-scenario, especially when there is a debilitating health or mental condition, more complex legal action may be needed. A child may need to petition the court for guardianship or conservatorship if a parent is proven incompetent.

In some situations, where families simply can't see eye to eye, the parents may have the final say.

Myra Salzer, owner of Boulder-based wealth management firm The Wealth Conservancy, says a dead parent's heirs may face what she terms "control beyond the grave" -- guidelines built into a trust that must be met to get an inheritance.

Among the situations her clients have faced were being allowed to buy only a certain type of real estate, being forced into prenuptial agreements and being disallowed because of a civil union or same-sex marriage.

"It is interesting that they are called trusts, because when you try to control from the grave do you really trust beneficiaries?" she says. "Shouldn't they be called 'distrusts'? It is really a testament to that lack of trust or that not believing that the beneficiary can manage things as well."

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