By By iA Private Wealth, July 13, 2021
If you think about the money lessons you learned in childhood, your parents were likely involved much of the time. Maybe they opened your first bank account or helped you decide what to do with cash gifts you received on special occasions. Maybe you simply observed how your parents handled money.
It’s natural to learn financial lessons from parents, but what if the roles are reversed and you need to help your aging parents oversee their finances? It can be awkward for everyone involved, but there are ways to make it constructive.
Starting the conversation
How you initiate the talk depends on family dynamics. Perhaps you can be direct and dive right into a chat about finances. If you need a more subtle approach, find something that can help you transition into the conversation. Are your parents thinking of selling their home? Has one of them recently dealt with an illness? Maybe another elderly family member is struggling to manage their finances.
Regardless of how you get to the discussion stage, once you’re there remember to be respectful and compassionate. Money is highly personal and can be challenging for parents to open up about, especially if they’re used to being in control or feel embarrassed about needing help from their child.
However, it’s an important conversation because you want your parents to meet their regular expenses and enjoy a decent quality of life. If they encounter significant physical or mental health issues, they should be legally and financially prepared.
Key topics to discuss
Estate planning should be a top priority. Ensure your parents have an up-to-date will that stipulates how they want their financial assets and property distributed after they pass away. This can provide clarity to the family, as well as give your parents peace of mind that their wishes will be carried out.
It’s also good to have powers of attorney (POAs) in case your parents become incapacitated and need assistance managing their financial affairs or making personal care decisions. Wills and POAs are only valid if created while your parents are deemed mentally capable, so prepare documentation as soon as possible – before they display signs of incapacitation.
This discussion is also an opportunity to understand your parents’ cash flow situation. Take inventory of their income sources, from government benefits and workplace pensions to registered plans (e.g., RRIFs, TFSAs) and other investments. Then list their regular expenses for shelter, food, utilities, travel, hobbies and entertainment, medication, etc.
Do your parents have sufficient income to meet their expenses? What if health issues require moving to a long-term care facility or hiring professional care workers? If their budget cannot accommodate these expenses, do your parents qualify for government assistance? Can you and other family members help with funding or care requirements?
Also find out what insurance policies (if any) your parents have. You need to know the extent of coverage for life, health and/or long-term care insurance, as well as the premiums they pay to keep the policies in force.
Confirm that their tax returns have been filed and that there’s no tax outstanding. This will ensure your parents can receive the government benefits they’re entitled to beyond CPP and OAS, such as the Disability Tax Credit or Guaranteed Income Supplement.
Support is available
An Investment Advisor can help you assess your parents’ financial health and make recommendations to strengthen your parents’ financial circumstances, so they can approach the future with confidence and peace of mind.
Speak with an iA Private Wealth Investment Advisor to learn more about how to prepare for the money conversation with your aging parents.
This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.
iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and a business name under which iA Private Wealth Inc. operates.
This is not an official website or publication of iA Private Wealth and the information and opinions contained herein do not necessarily reflect the opinion of iA Private Wealth. The particulars contained on this website were obtained from various sources which are believed to be reliable, but no representation or warranty, express or implied, is made by iA Private Wealth, its affiliates, employees, agents or any other person as to its accuracy, completeness or correctness. Furthermore, this website is provided for information purposes only and is not construed as an offer or solicitation for the sale or purchase of securities. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces where they are registered.
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