Having the money talk with aging loved ones is important.

We’re all going to get there eventually, the lucky ones, that is. Old age. And we’ll see that first in our parents if we’re lucky enough to keep them with us that long. 

Because with age comes a decreased ability to properly focus on complicated issues like personal finance, your parents may need you to take over some or all of that responsibility for them. It isn’t just the financially smart thing to do; it’s also the loving thing to do. They’ve worked hard all their lives to take care of themselves and you, and you don’t want to see them lose any of that due to forgetfulness or a diminished ability to make sound financial decisions. 

Today, Money Alignment Academy shares some ideas for you on how to begin talking to your senior loved one about these important but sensitive matters. 

First, the Paperwork

If you can, start that conversation early before the need arises so that when the time comes, you’ll have the necessary forms in place.

  • Power of Attorney. ElderLawAnswers explains that a Durable POA will take effect once a person has become incapacitated. A General POA gives the agent-in-fact broad powers such as making financial decisions, settling claims, and employing professional help. And Limited POA, which, as the name implies, limits the powers to certain actions.
  • A Living Will is a legal document that specifies requests for end-of-life care. 
  • Disclosure of all your loved one’s assets and obligations, such as bank account numbers, credit card information, Social Security, retirement, and 401k plans. Also, any life insurance or long-term care insurance policy information. 

When Is It Time to Talk?

Signs that it’s time or past the time to have that conversation could be observing them having difficulty seeing, noticing unopened mail, or discovering odd purchases. If you’ve concluded they would be safer and happier in a care facility, you’ll have to make some decisions regarding things like home and/or business sales. 

  • Selling a home to pay for assisted living is common, according to the Dolinski Group. Before Medicaid will pay for assisted living they will take assets first, though, like money from the sale of a home. It’s best to contact an estate lawyer or elder attorney to learn about how to shelter assets in order to manage that equity to your loved one’s best advantage. You can use a home sale calculator to determine how much you can expect to receive from the sale of the home.
  • Refinancing a home is also common, particularly if only one parent requires assisted living. Through refinancing, your parents may be able to cash out equity for their home to assist with medical bills. Learning how to refinance can be confusing if they haven’t done it before, however. Be sure to provide them with resources and assistance throughout the application process.
  • Selling a business. If your loved one is either a sole business owner or if they have partners, many of the steps involved will be the same, and many will vary depending on if the business is a sole-proprietorship, an LLC, or a multi-member LLC. In any case, you’ll need a complete valuation of the business, its assets, including real estate and inventory, and debts. You will, of course, need access to all the company’s documents like business tax returns, customer and vendor contracts, and building and equipment leases. You’ll want to have an attorney to help with the dissolution of business, but you can save yourself a lot of billable hours by gathering as many documents as you can prior to the formal sale. 
  • Choosing a nursing home facility. It’s never easy when your loved one needs to move into a nursing home. Luckily, there are many options in the Phoenix area, so begin by checking ratings and reviews. You should also visit the facilities in advance. Last but not least, write down a list of questions and don’t hesitate to press for detailed answers!   

Caring for your loved one’s financial health is as important as caring for their physical well-being. It’s an act of love that, even if they cannot express it properly, is understood and appreciated. 

Money Alignment Academy is a financial wellness provider offering on-demand personal finance courses as well as one-on-one financial coaching. If you have any questions, please email [email protected].