How to deal with difficult conversations about finances and health with your elderly parents

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by TD Insurance

Personal Finance Family Finance

Children may find themselves needing to intervene when cognitive, physical or financial problems arise in their parents’ lives

Barring the worst scenarios, children should not dictate terms and parents should be part of the decision-making process. Barring the worst scenarios, children should not dictate terms and parents should be part of the decision-making process. Photo by Chloe Cushman/National Post clip art files

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In an ongoing series, the Financial Post examines personal financial questions related to life’s major milestones, from marriage to retirement.

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Since the average life expectancy for Canadians in 2019 was 82 years, according to the World Bank, compared to 78.9 years in 1999, many, if not most, healthy people can expect to live a long life.

But many issues can arise in seniority, from cognitive to physical to financial, often all three intertwined, and that sometimes means that people’s children have to step in to fill the gaps.

For example, a pension may prove insufficient to make ends meet, or the parent may prove unable to manage some financial aspect of their lives. It can even be as simple as the need to downsize houses.

It probably won’t be easy for their adult offspring to help, as the child-parent relationship usually involves complicated feelings such as pride and protection. But Jason Heath, a certified financial planner at Objective Financial Partners Inc., said it’s important that both sides are receptive, approach the situation slowly, and hope for the best.

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“For some people it doesn’t even have to be specifics about their parents or about their finances, it can be as simple as (saying to them), ‘When something happens, this is who you talk to. This person is my advisor, this person is my accountant, this person is my lawyer,” Heath said.

It is important not to separate the health problems of aging from financial ones. It is important not to separate the health problems of aging from financial ones. Photo by Getty Images/iStockphoto

“On the other side of long-term care, those are tough conversations to have, but I definitely encourage people to have them. To ask, “If something happened and you had a cognitive impairment, where would you like to be?” Sometimes you don’t get the chance to ask those questions.”

The same goes for simpler situations where the parents may need extra help around the house, such as hiring someone to shovel snow for them.

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Be that as it may, one should not assume that having siblings will necessarily make things easier. Arguments can arise about who intervenes with physical help, financial help, not enough or no help at all. A brother or sister outside the province does not help either.

Heath notes that there can be unfortunate occasions where children divide the money once their parents have moved into a health care facility, rather than keep it for any emergencies.

Parents’ finances should not be a black box

Jason Heath

It is also important not to separate the health problems of aging from the financial ones. In many ways they are one and the same.

“Siblings can work together to delegate medical appointments, or who will help pay bills. Who can be a financial support, if necessary?” said Bev Evans, portfolio manager, wealth advisor and investment advisor to the Evans & Carruthers team at Richardson Wealth Ltd. “Who more could be there from day to day to make sure the parents are safe and have what they need?”

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She adds that such conversations should be rooted in respect and dignity. Barring the worst scenarios, the children should not dictate the terms and the parents should be part of the decision-making process.

Like many situations involving family, things can get more than a little tense. Evans recommends bringing in a third party to alleviate many of the emotions that can arise naturally.

That might be financial advisors, but Heath also worked with a long-term care consultant for his mother who “triggered family conversations we didn’t know we needed to have.”

If the problem is as simple as downsizing to make parents’ lives easier, all of the above still applies, but convincing someone that their life can be more fun if they move to a smaller move house.

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“Given the value of real estate and the fact that we are living longer, the primary residence remains their greatest asset for many elderly people,” Evans said. “There comes a time when downsizing and taking away equity can really unlock a lot of options for the older person to adopt a new way of living that gives them a lot more freedom and flexibility.”

Both seniors and their adult children can have a lot of what Evans calls “misconceptions” when it comes to the options available beyond just living in your own home. Long-term care facilities, for example, often have long waiting lists, so it can be helpful to look at future needs early if you are notified of a potential health problem with your parents.

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Aside from all the health issues that come with aging, there is also elder fraud that you will have to deal with. Both Evans and Heath agree that such fraud for adult children is difficult to spot unless they have some knowledge of or access to their parents’ finances.

Therefore, a basic level of trust must exist between generations while preserving the privacy of the parents. Ideally, “parents’ finances shouldn’t be a black box,” Evans said.

Like everything else when it comes to finances, the key lies in careful and open communication.

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This post How to deal with difficult conversations about finances and health with your elderly parents

was original published at “https://financialpost.com/personal-finance/family-finance/your-parents-did-a-lot-for-you-heres-what-to-do-when-its-your-turn”

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