Your parents cared for you for years, and now it’s your turn. As you parents start to reach an older age, there are several financial decisions that they will need to make. By not making some key choices now they could leave you and your loved ones with some difficult decisions later.
Talking about money and death is never a fun topic, but it’s important that you have those hard talks with your loved ones before it’s too late. It will save a lot of pain and frustration in the future.
1. Life Insurance
Let’s get one of the most difficult out of the way, life insurance. Nobody wants to think about anything tragic happening to themselves or their parents, but not planning for the inevitable is one of the worst mistakes that you could make for your loved ones.
Life insurance will give you and your loved ones the money that they need in case something tragic were to happen to them.
When you or your parent is looking buy life insurance, there are a couple of different types of plans that you should consider. One popular type of life insurance is a burial insurance policy (check out BurialInsurance.org for more information and pricing).
These plans are much smaller and are designed for older applicants that don’t have a massive amount of debt, but still, want to give their family the money to pay for any funeral fees. These plans usually only give around $25,000 worth of insurance coverage.
2. Will and Trusts
A will is one of the most important documents that you can have prepared. The will is a legal document which outlines how everything should be managed when they passed away. The will should cover everything from what happens to the estate to who gets all of the assets.
Every year, there are millions of people that pass away without a will, which can lead to months of frustration. A trust is very similar, but it describes how the funds from 401k’s and IRAs will be managed.
3. Power of Attorney
A power of attorney is the person that can make legal decisions regarding your parents. This could be anything from financial decisions to legal matters. The person that has the power of attorney is going to have final say any decisions. It’s important that your parents name that person before it’s too late.
4. Discuss Funeral Plans
Planning a funeral is not a fun way to spend a Saturday, but it’s crucial that you talk to your parents about how they want to be laid to rest. Sure, it’s going to be difficult, but if you don’t have this talk now, you’re going to have to make these choices while you’re grieving.
5. Long-term Care Insurance
Long-term care insurance works similar to a disability insurance policy. Long-term care will give you and your family the money that you need to pay for any assistance care that your parents need. If your parents ever need any long-term care, you’ll see that it can cost thousands and thousands of dollars every year.
Most people believe that Medicare will pay for these expenses, but in most cases, the program won’t pay for long-term care. There are only a few specific situations in which Medicare pays for any assisted living services. Otherwise, you’ll be paying for those bills out-of-pocket.
6. Investments in Retirement
Just because your parents have retired doesn’t mean that they shouldn’t be investing their money. Life is continually changing, and your investments should be changing with it. Retirement is a unique time of life, and the investments are going to reflect that.
Most people need to change their portfolios to safer investments to make sure they lock in all their gains from a lifetime of investing.
7. Hiring a Financial Planner
Managing your parent’s finances and looking at all of their investments can be difficult and confusing. Talk to your parents about hiring a financial planner. That can take a lot of stress off of both you and your parents. Having a financial advisor can help manage all of the finances and keep everything in one place.
Talking to your Parents
Don’t put off having these conversations. You never know what’s going to happen tomorrow, and while you don’t want to sit down and plan out these things, it’s one of the most important things that you can do for yourself, your parents, and your loved ones.
A great Resource to Prepare for a Parent Talk
In preparation for talking to your parents, you may want to read the book “Beyond the Grave” by Gerald and Jeffrey Condon. It’s an insightful book about how to properly pass wealth from one generation to another.