Huddleston had to move fast to update her mother’s will and power of attorney, and get her mom’s finances in order before the dementia progressed to the point where she would be declared incompetent. The problem was that Huddleston was asking for details that her mother couldn’t remember. “I waited too long to talk to my mother about her finances, and then I had to scramble and play detective to find out stuff,” Huddleston said. What she found out was that her mother had been writing checks to pretty much any organization that asked, including an attempt to wire hundreds of dollars to a scammer who promised “a large cash prize” in return. At one point, Huddleston received a notice that a bank account her mother had that held $50,000 worth of investments was about to be forfeited to the state treasury department. Her mother, who at this point was living in an assisted-care facility, had completely forgotten about the account. “If I didn’t have power of attorney to make financial decisions for her, we would have lost that money,” she said. Huddleston is a personal-finance writer and used her experience as the basis for the book “Mom and Dad, We Need to Talk: How To Have Essential Conversations With Your Parents About Their Finances.” While Huddleston’s situation is unique, the fact that she waited too long to talk to her mother about estate planning is not. Most people don’t think to talk to their aging parents about their finances until it is too late. According to a 2022 GoBankingRates survey, more than 1 in 4 Americans have never talked about money management with their parents.
Overcoming Misconceptions About Estate Planning
According to a 2021 Gallup News poll, 46% of all adults in the U.S. have wills and an even smaller percentage have assigned someone power of attorney or health care proxy to make legal and health decisions for them in the event they become mentally or physically incapacitated. Put another way, more than half of all adults in the U.S. don’t have legal records of how they want their financial and medical wishes carried out for them. Andrew Chan, a partner at Locker Financial Services, said the main reason people put off estate planning is because they don’t really understand what it means or entails. “They think of an estate plan as something for people with a lot of money or assets,” Chan said. The reality is that basic estate planning includes gathering a few legal documents that can be filled out with help from an estate planning attorney, or via a platform such as LegalZoom (although Chan advises getting counsel from an estate planning attorney). Everyone, no matter their age or number of assets, should do some form of estate planning. At its most basic, a proper and durable estate plan includes the following documents:
Will: This sets forth your wishes regarding distribution of assets and care of minor children, if applicable. It also designates an executor to carry out these wishes. Living will: Living wills detail preferences for medical care and who should carry them out if you are unable to make decisions for yourself. Power of attorney: This names a person to make legal decisions for you when you are unable to do so. Beneficiary designations: This includes primary and secondary recipients of benefits from insurance, pension, 401(k), and other assets not covered under a will. Chan advises confirming these are up-to-date at least once a year.
Starting the Estate Planning Discussion With Your Parents
Talking with aging parents about money is something most adult children know they must do, yet most of them don’t. Money is one of those topics that is tough to talk about with parents, said Bobbi Rebell, a certified financial planner, podcast host, and author of Launching Financial Grownups. That goes double for parents in their twilight years. “The biggest challenge with initiating financial conversations with an aging parent is coming to terms with the fact that you are planning for a day when they won’t be around,” Rebell said. According to Rebell, the role reversal of children taking care of their parents can be “emotionally complicated.” One of the biggest mistakes people make when talking about estate planning with their parents is framing the discussion around their parents’ age or their assets, according to Rebell. Instead, estate planning experts advise framing the discussion around protection. For parents whose health is in decline, for example, delaying estate planning could put their financial assets and even their health care at risk. Wills, power of attorney, and other documents needed to transfer assets or legal authority to make decisions on someone’s behalf require the person signing to be mentally competent, although the level of competency varies by document and state. To help make your parents feel more comfortable with the topic, consider talking about your own financial future first. By working on your estate plans together, your parents may see the bigger picture and visualize the importance of leaving a financial legacy behind.
Estate Planning Can Help the Kids, Too
Talking about money with aging parents is difficult enough on its own, but it’s not just hard for the parents. About 23% of all U.S. adults and 54% of those over age 40 are part of the sandwich generation—a group that has both a parent over the age of 65 and is financially supporting a child younger than 18, according to a Pew Research Center study. Juggling saving for college and retirement while also staying on top of an aging parent’s health care bills is enough to freak out anyone, according to Vicki Cook, co-founder of Women Who Money and co-author of the book “Estate Planning 101.” She said the realization that an ill parent doesn’t have an estate plan in place “just compounds the stress at a sensitive time.” If siblings are involved with managing financial responsibility, Cook suggested talking to them first to get aligned on what role each is willing to play. One sibling could handle health care matters, for example, while another looks after financial investments. “Dividing different aspects of estate planning among siblings both lessens the stress on each other and shows aging parents that everyone is looking after them and checking one another as well,” Cook said.
Other Resources To Help
When estate planning for aging parents, you don’t need to do it alone. In addition to seeking the advice of a financial professional, there are plenty of resources available to assist in the process.
Speak with an elder-care attorney: Lawyers in this field of law are trained specifically to manage legal issues older Americans or individuals with disabilities often face. Work with the Family Caregiver Alliance: This organization offers services such as support groups and online courses dedicated to aiding family caregivers of adults with physical or cognitive impairments. One service includes legal and financial consultation. Cameron Huddleston’s “In Case of Emergency” organizer: Huddleston’s downloadable tool can be used as a checklist while you are discussing estate planning with your aging parents. It includes sections for basic credit and debit card information, details of their monthly bills, any debts they owe, and more.
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