Looking after parents in old age

The will is probably the most strained part of the talk

WHILE we were growing up, our parents had to initiate uncomfortable conversations that, for us, always felt ill-timed. However, these heart-to-heart chats were for our own good, giving us important information about growing up and becoming responsible adults.

But as your parents get older, you may find that the roles are reversed, and you’re the one who has to initiate the awkward conversation — about your parents’ money.

When broaching this topic, the first thing you need to establish is your parents’ retirement savings. While you don’t need to know exact amounts, you need to know where they plan to live once they retire and how they plan to survive. Will they need your help?

It’s not unusual for many adult children to end up having to take care of their parents. An honest conversation will better prepare you for anything that might happen.

Asking your parents whether they have a will is probably the most strained part of the talk, but it’s important and unavoidable.

You should know whether there is a will and, if so, where you’ll find it. If there isn’t one, offer to help them draw one up by referring them to a reputable financial planner or lawyer who has experience in dealing with estate planning.

Ironing out the details of the estate plan is an essential part of the conversation. You’ll need to talk about a trustee — if they’re thinking about setting up a trust — or who will be executor of the estate.

An executor is responsible for ensuring that money owed by the estate is paid and that the remaining property is distributed among the beneficiaries as set out in the will.

It may also be worth asking about a living will, which is useful if your parents reach a stage where they are unable to give meaningful consent or instructions about prolonging life.

A living will names the person who has been given the power of attorney, as well as any other important instructions regarding your parents’ medical care.

Once you’ve dealt with estate planning, discuss how much debt your parents have and how long it will take to pay off.

Do they have any insurance that will take care of the outstanding credit in the event of their death?

Of course you don’t want to have to think about your parents’ financial planning, but it’s an unavoidable conversation. If your parents’ credit exceeds their assets, it may mean you’ll have to step in to help with that. If they have any assets such as a house, you may have to sell it to raise funds to pay creditors.

Do not forget to help your parents review their policies to ensure that their beneficiaries are up to date.

Their will and all other components of their estate plan must dovetail.

If your parents have absolutely nothing in place, get the right advice for them. A suitable financial adviser or planner who deals with elderly clients regularly will be able to assist you.

Don’t forget to employ a trusted lawyer to help with the legal aspects, such as setting up a trust, choosing a trustee or an executor, or setting out the conditions of the will properly.

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