By Pamela A. Keene
How do you know when it’s time to have “the conversation” with your parents, you know, the one about wills, health care directives and finances? According to financial adviser Beth Baldwin with Edward Jones in Gainesville, there’s no time like the present.
“It’s important for adult children to be aware of their parents’ wishes and finances,” Beth says. “There may come a time when they will need to assist their parents as they age.”
A good first step, she says, is to check to be sure that they have all the necessary documents updated, such as their Power of Attorney, their Advance Health Care Directive and beneficiary designations on life insurance policies and the like.
“These documents should be reviewed at least every five years or any time there’s a family life event, such as a marriage, a divorce, the birth or adoption of children or the death of a loved one,” Beth says. “For instance, a grandparent may specify funds to pay for college for a grandchild, but when another is born, they may want to do the same thing for the next child.”
She also recommends that parents and their adult children talk frankly about money, and that parents designate a person to step in to manage day-to-day finances on their behalf if they are not capable of doing so.
“Sometimes parents may be resistant to sharing their financial information, even with adult children, but when the time comes, it’s of great benefit for a family member to be able to act on their behalf,” she says. “That can include anything from being aware of financial accounts – checking, savings and such – to knowing general details about investments, insurance and other financial instruments.
“Execute a signature card on at least one account to include at least one adult child as a signatory,” she says. “An adult child who lives nearby is a logical choice, but for myriad reasons, there is not hard-and-fast rule.” his designee can be the same person as the named Power of Attorney, but it is not required.
“People may not be aware that a Power of Attorney document to act on behalf of another cannot be used once that person is deceased. Discussing this situation with your banker and/or financial adviser will help you understand the implications and make arrangements accordingly,” she says.
The will can cover a variety of issues, but if the parent or parents have brokerage accounts and other investments, it is advisable to ensure that at least one adult child knows the details, who to talk with, and where to find various documents.
She suggests that parents and their adult children create a notebook that includes a list of assets, information about bank accounts and credit cards, brokerage accounts, real estate and tax records. Include information about monthly obligations, bills, living expenses and loans. The parents should keep a copy and the designed adult child should have a duplicate.
“If you have a financial adviser, attorney or accountant/CPA, he or she may be able to provide an Estate Planning Organizer for this purpose,” Beth says. Check with churches, independent and assisted living facilities, or local social services agencies for literature and materials to help with the process.
“People may not be aware that a Power of Attorney
document to act on behalf of another cannot be used
once that person is deceased.”
Having a team of professional advisers that includes your financial adviser, your accountant and your attorney, plus one or more of your adult children has several advantages. It can ensure that everyone is on the same page with your plans and wishes and can keep all parties aware of any changes that may be made. Include at least one of your adult children.
“Perhaps the hardest part is bringing up the subject for the first time,” Beth says. “If you’re in doubt about how to start the conversation, try ‘I have a friend who recently lost a parent and here are some of the issues that they faced.’ Be respectful of your parent’s privacy and their desire to maintain control of their finances.
“Every family is different, but we hope that parents and their adult children stay in touch with each other often enough to be aware of finances and life decisions,” Beth says. “As mobile a society as we are, with families and extended families spread out across the country or even around the world, regular conversations about these matters can help families navigate through difficult times. Losing a parent Is emotional and stressful. The best thing parents can do for their families is to have the conversation openly and leave them with something to be used at their death.”