The Smart Girl’s Guide to helping aging parents manage their finances

Discussing financial matters with older parents can be tricky to navigate. We put together a handy guide to simplify the process

For most of us, adulting can be hard—you have to start paying your own bills, file your own taxes, get serious about your savings and start thinking about the future. More often than not, it starts to hit home when you have to be responsible for someone other than yourself, including your spouse, children and eventually, when the time comes, your aging parents. 

In most families, financial matters can be sensitive to navigate;  this is especially true with older parents who are still relatively capable of managing their lives and don’t want their children to do it for them. How do you discuss the future without sounding morbid, or worse, inquisitive about your inheritance? Yet, as parents get older, it becomes increasingly apparent that some help is needed. It could involve insurance claims after  hospitalisation, filing taxes, paying gas and electricity bills online, or even seemingly mundane tasks such as recharging their mobile phones. Experts offer some insight into how to approach that conversation tactfully and empathetically, and how to help your aging parents manage their money before a possible crisis hits. 

Get the conversation going

Broaching the topic can be tricky for both the caregiver as well as the person being cared for. The latter may not be ready for a conversation about their own mortality or what should be done when they are not fully capable of managing their money anymore.

It is ideal to have this conversation early on so you can sort out the paperwork and future course of action while your parents are fairly independent and alive.  

“The conversation should be started once you ideally become aware of money matters yourself. This often happens at some point in your 30s which would typically be in the 60s (for parents) in most cases,” says Vishal Dhawan, CEO and founder of Mumbai-based Plan Ahead Wealth Advisors.

However, things may not always be smooth, as discussions around money can make people feel vulnerable and anxious. Sopick a time that feels right for your family and circumstances. “There is no fixed timeline; there is no right or wrong way to do it. And there is no surety that things will go smoothly all the time even if the intentions are noble,” says author and financial planner Kiran Telang.  “It is a lot easier if discussions around money were had earlier. Then things are spoken about as a part of regular conversations, and specific matters can be taken care of in a specifically carved out niche,” says Telang. If not, she suggests that milestone years—or even crucial events such as impending retirement, a major illness, the passing away of a parent or their sibling, or the marriage of a grandchild—could all serve as crucial junctures to bring up the conversation.  

Discuss it with your siblings

Before you launch into this conversation with your parents, it is important to chat about it with your siblings. While relationships may not always be easy, it is crucial that siblings are on the same page while charting out the course of action for their parents—whether it is their financial future, the cost of care, or where they will stay once they need help to get around. Perhaps the sibling who is closest to the parents emotionally or logistically, or the sibling that is financially adept to manage the situation can take charge while keeping the others informed. 

Show sensitivity and respect

While it makes good financial sense to have things in order very early on, the conversation may come like a bolt from the blue for your parents. Approach it with empathy and respect. The whole purpose of this exercise is to provide support when needed, and not force them to hand over control.

You could start by discussing anecdotes or learnings from other families or friends. Alternatively,  you could ask your family’s financial advisor so that they are speaking to someone they are used to discussing financial matters with, suggests Dhawan.  

Moreover, no matter how nicely or respectfully you ask your parents about managing their finances, it implies that they are not capable of handling them. Instead, start by offering assistance which allows them to regulate how much, and when, they want to share. For instance: ‘Do you need any help with filing your returns, or managing the documentation? Would you want me  to keep track of any regular payments that need to be made, like health insurance or taxes? Would you need help finding professionals to handle your money?’ “If you are not living together, talking to them and checking on them regularly is necessary. Lonely people are more prone to attacks by financial fraudsters or cyber crooks,” says Telang. It goes without saying that if there is any reluctance in sharing the details, it is pertinent that you save the conversation for another day. 

Create a comprehensive list

If it hasn’t been done already, encourage your parents to create a comprehensive list of their assets and liabilities, along with relevant bank account numbers, contact information and other pertinent details. This list should also include numbers of their doctors, accountants, bank account managers and lawyers, so you can reach out to them should the need arise.

“Ideally a detailed inventory is suggested when it comes to bank accounts, lockers,  health insurance policies, demat accounts, mutual fund, bonds, post office schemes, PPF accounts, annuities and pension accounts, as well as phone and email passwords to access OTPs and real estate investments. It is also important to know who the joint holders and nominees are, and if a will is made, where the original will is,” says Dhawan. 

Ensure the paperwork is complete

It is imperative to ensure that your parents’ legal documents are complete and that details such as nominations, beneficiaries are listed and in order. Here are a few documents you should have in place to assist them: 

Will: A document outlining how a person’s assets will be distributed upon their death, the will would also appoint a personal representative /executor to ensure things are done as they would have liked. 

“The will should be clear in terms of the beneficiaries and the executor should ideally be kept informed of the intent of the parents or testators about how they wish to have the assets distributed,” says Dhawan. 

Power of attorney: This is an important legal document that allows a person to appoint another person or organisation to manage their property, medical affairs and finances on their behalf, in their absence or when they are unable to do so. “A power of attorney works only till the person is alive and is of sound mind. It needs to be carefully handled to avoid misuse of the powers given. Specific power of attorney can be given for limited use,” says Telang.  

Living will: This is a written, legal document that outlines the medical treatments you would and would not want to be used to keep you alive. It would also cover your preferences for other medical decisions, such as pain management or organ donation. “A living will has been legalised;  however it is still quite cumbersome to put into action. But it can definitely be a step in the right direction,” says Telang.   

Trust: A trust is a legal entity created under Indian law to hold and manage property for the benefit of one or more individuals. “It may also be considered as a succession tool in certain situations wherein the parents want the assets to be distributed gradually or at certain milestones,” says Dhawan.

Calculate the cost of healthcare 

Emergencies emanating from sudden medical expenses can set your parents back financially and even push them into debt if you are not prepared. Hence, it is critical to ensure that they have health insurance, and adequate cover to typically pay or reimburse the amount paid towards treatment. In order to arrive at the correct coverage amount, start with the city your parents live in and figure out what the medical costs are. If your parents are living alone and are likely to need assistance in the long run, factor in the cost of home care too. “Have  an open discussion with family on matters such as treatment for critical illnesses, use of life-support systems, incapacitation, coma, mental degeneration, dementia or assisted living facilities and managing expenses in these situations. If the wishes are known, that will be one step towards putting systems in place to deal with such situations if they ever arise,” advises Telang. 

Store documents carefully

It’s critical to have a single place where you can find all important documents, says Dhawan. This could be a bag, a safe deposit locker at home or a cupboard where all original copies are filed and stored. It is important that the concerned family members are aware of the location. It would also make sense to make digital copies of the same and store them in a single place for easy access with a password for security. This ensures that you have copies should the originals get misplaced or are damaged. This password should be available to close family members.

Embrace the discomfort

If your parents are reluctant to have this conversation, it is perhaps wise to let go. You could suggest that they instead talk to a trusted family member, financial planner or lawyer with you, to eventually get the ball rolling.

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