Talking about money with your parents can be difficult. However, these conversations can also be some of the most important ones you will have with those you love. It doesn’t need to be a full examination of their financial records, as you clearly don’t want to overstep any boundaries or cause offence. But there are also questions you need to ask to ensure your parents have prepared for the next stage of their lives, as well as helping you to know about any areas where you might need to provide support in the future, as early as possible. Here are five important questions you should be asking:
Not telling their children where all their assets are is often one of the biggest mistakes made by parents when planning their estate. Asking your parents to put everything in one folder, in a safe place that’s easy to locate is a good idea, if they haven’t already done so. This should include bank, investment and pension accounts, including account numbers. Digital and online storage is increasingly popular and can help prevent files from becoming lost or damaged.
Assuming that they have a financial plan, your parents should be reviewing this regularly. They may have planned for a certain life expectancy during their working life, which may now be a significant number of years longer. You need to understand the sources of your parents’ income when they retire. It’s also a good idea to know how to contact their solicitor, accountant or financial adviser if applicable.
Make sure your parents have a will in place and that it is up to date. A will more than five years old should be reviewed to ensure it reflects your parents’ wishes. It’s also a good idea to find out about any unusual or specific requests in their will now, to avoid any unexpected surprises when you least want to experience them. Asking your parents to check the beneficiaries of any life insurance policies or pensions is also worthwhile, as these can override bequests in a will.
A lasting power of attorney, or LPA is a legal document which nominates a trusted friend or relative to look after their affairs if they are unable to do so themselves. It’s a sensitive issue to know when the time is right but it is worth putting an LPA in a place long before you think you may need it, so you can make the right choices on your parents’ behalf.
Perhaps the most difficult question, but one of the most important. If your parents can no longer manage in, or maintain, their home due to age, illness or worse, you need to know what their plans are and what they would be happy to do. Neither you nor your parents is likely to want to think about growing old and frail, but if you have the discussion sooner rather than later, it can make both the financial and emotional sides of dealing with matters surrounding care when the time comes that much easier.