Choose your words carefully when talking money with your elderly parents.
When it comes to personal finances, the environment for abuse of trust between the generations remains fertile, Monash University academics once wrote in a study called Protecting Elders’ Assets.
State Trustees Victoria chief executive Craig Dent goes further, saying financial abuse of the elderly “is one of the most serious emerging issues we have in society today. Our day-to-day experience is of families with extreme dysfunction”.
But there is also the flip side of the coin, with concerned adult children generally worried about the state of their parents’ financial affairs. Do they have major credit card or other debt? Do they still have a mortgage? Will they be forced to rent in retirement? Is someone else, perhaps a close neighbour or carer, helping themselves to Ma and Pa’s savings? Will they be able to afford a nursing home when they can no longer live independently?
But plucking up the courage to ask the right questions of elderly parents without seeming nosey can be tricky.
The last thing any adult child wants is for their parents to become defensive and decide to keep them completely in the dark.
The MoneySmart website has some useful tips for getting the money conversation started, without coming across as prying, money-hungry, judgemental or biased. Its recommendations are:
- Keep it relevant: Only ask for the information you need to know in order to work out how to help them. Avoid prying into irrelevant personal details
- Encourage a discussion: Ask them about their plans for the future, and any concerns they might have
- Share your own concerns: Explain why it's important to have this conversation with them. For example, you could explain that if their health deteriorated or anything happened to them, someone would have to make decisions on their behalf
- Without pressuring them to nominate anyone in particular, you could suggest they think about who they would want to make medical or financial decisions for them, in the event they could not do it for themselves.
If you feel they are welcoming your offer of help, the next steps are to:
- take stock of their current financial position: You may wish to use MoneySmart’s own net worth calculator to help work out the total value of their assets and debts
- suggest they make a list of their important documents, including their birth and marriage certificate, will, enduring power of attorney, advance healthcare directive, house deeds and bank account details, and ensure they store them securely.
According to MoneySmart, if your loved one dies without a valid will and you didn’t get around to that tricky money conversation, the eventual distribution of their estate or debts may be decided in a manner that they would not have wished.
How would you broach the subject of personal finances with your parents? Have your children approached you to discuss your financial status? If so, how did you take it?