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Finance FAQs #3

Provided here are all currently available questions with answers. You may return to your select point of entry or continue here, reading along for general information gathering. The following is not intended as a substitute for qualified legal, financial, psychological, or tax counseling. Please consult your attorney, financial consultant, or tax advisor as applicable.
Questions and Answers

Q1. What if my parents need help?

A1. Donna Burrill, Burrill Financial Services :

1. Understand the Issues

People in their 70's and older have a strong sense of independence and privacy. This can contribute to unwillingness to discuss their situation. Older citizens also fear losing their independence (physical and financially) and again, this fear can impede financial dialog. It is human nature to avoid discussion potentially bad decisions that were made because of embarrassment and fear that it may be too late to do anything about it. Mature adults are subject to more serious illnesses, injuries and longer recuperation time. Memory, thought processing, vision and hearing impairments make money management more difficult and often causes seniors to avoid addressing financial matters.

They are your parents. Many cannot bring themselves to acknowledge you might know better than they.

2. Be Proactive

For most adults who are planning their and their children's future the issue or helping elderly parents is a matter of when and to what extent, not if. Costs of living today, especially health care, are increasing at rates faster than your parents income is. Probably you too are experiencing this. Most parents did not have the financial tools available to them, as you do, to prepare for post-retirement income needs. If you are doing your own comprehensive financial planning, making your parents' potential needs a part of that discussion makes sense.

How do you learn about parents' finances? Invite them to a frank discussion about your goals and concerns and explain how you want to incorporate ways to provide certain supplements if needed. Consider hiring a financial professional to facilitate the discussion. For parents who are too sensitive to directly participate in planning with you or your financial planner, you can compile a usable profile by observation and limited questioning. Observations you can make are

    • What is their standard of living?
    • What kind of comments do they make about costs of goods?
    • What are their social and entertainment activities
    • What is the nature of their gift giving

Forming questions successfully to understand parents' finances when they are unwilling to have an open discussion is not easy. Sometimes a "story" question can draw them out. For instance, "____ at work told me their parents recently bought long-term care policies. Have you looked into those? What do you think about them?" This kind of structure can be used to learn about other financial matters as well.

3. Make this a win-win opportunity

Depending on what you learn and your circumstances, your course of action to be prepared should a need arise and take care of yourself might involve:

    • Naming your parent(s) as beneficiary on part of your life insurance.
    • Putting some savings each month into an annuity with you the owner and they the annuitant and beneficiary.
    • Purchasing a long-term care policy with return of premium benefit.

These three ideas create assets for a future need without your parents knowing it (other than for the long-term care policies) and enable you to recover costs or benefits if your parents don't need the help. Another idea that is win-win is to consider some kind of cash value life insurance. If you are in your 30's or early 40's, the premium is not too high and the cash value can be tapped for parents' care, while the insurance remains there for your own family and estate planning need.

4. Get your siblings involved!

If everyone pitches in a little each month now, as each can afford, it is less expensive and stressful than waiting for the parents' need to eventually arise in a large amount. There are other ideas. A financial planning or estate planning professional could help customize a workable strategy for your family.

 

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Mimi Wahlfeldt
Good Samaritan Society Fort Collins Village
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