Yes, end-of-life planning is a tough subject. How to talk to your parents about it

Cameron Huddleston was 35 when her mom was diagnosed with Alzheimer's disease.

Trying to ask her mom about her financial situation and end-of-life plans while she was showing signs of memory loss was a challenge. "When there's an emergency, it's a lot harder to have a rational conversation," she says. "Your emotions are all over the place."

That's why Huddleston, a financial journalist, wants people to start talking to their parents about these topics early. Ask them about their plans for retirement, how they will pay for health care if they get sick, and what will happen to their property when they die. She covers these subjects in her 2019 book, Mom and Dad, We Need to Talk: How to Have Essential Conversations with Your Parents About Their Finances.

Huddleston explains how to broach this conversation with your parents — and which documents and plans they should have in place.

Get a sense of your parents' end-of-life plans

Your parents might be hesitant to open up about their finances with you. For a long time, you were the child — and they were your caregivers. So Huddleston recommends asking them for advice as a way into the conversation. Start with a question like: I just had my first child. Should I set up a will? Or, I just started a new job. Should I be taking advantage of a workplace retirement plan?

"Their answers are going to give you clues about what sort of planning" they might have done in their own lives, she says. For example, if they say yes, you should draft up a will, that's a good sign — it's likely they have that document written for themselves.

On the other hand, if they say nope, don't worry about a 401K, that's a red flag. It might make you wonder whether they've prioritized saving for retirement. So you might probe a bit deeper (and get them thinking about the topic) by saying "maybe this is something we could look into together," says Huddleston.

You could also share a cautionary tale about a friend who's had to get involved with their parents' finances, says Huddleston. Maybe your friend's parent passed away without a will in place, and the family had to go to court. When you tell the story, she adds, you might say, "I hope we can avoid that."

Assess whether they're able to handle their affairs

If your parents are experiencing cognitive decline, there may be big changes in their spending habits, says Huddleston. So be on the lookout for choices that don't make sense to you — for example, lapses in bill payments or sudden, big-ticket purchases.

If that's the case, encourage your parents to get a health checkup, she adds. If a medical condition is compromising their decision-making, you'll need a power of attorney and a living will to make financial and medical decisions on their behalf – which we'll get into next.

Make sure they have a will to distribute their assets...

This is the most important item on the list, says Huddleston. A will is a legal document that states how a person wishes to distribute their assets after their death. Keep it somewhere safe. Then when a parent dies, you'll need to submit it to the court, along with a death certificate, in order for their assets to be distributed.

If a parent doesn't have a will, state law will determine who gets what. "A lot of people don't realize this. They think, 'my family can just work it out,' " she says. But having to go through the court system to handle a parent's assets is the last thing you'll want to do after a death, says Huddleston.

... and a power of attorney

In the event that your parents become unable to make financial and legal decisions for themselves, they will need a power of attorney. It's a legal document that allows another individual to step in and manage that person's finances during their lifetime. That includes everything from handling their bank accounts and property to doing their taxes or even filing a lawsuit on their behalf. This form is crucial for anyone showing signs of cognitive decline, says Huddleston.

You can find free, state-specific power of attorney forms online. Notarize it and keep the form in a safe place until you need it.

Outline their medical wishes in a living will

Unlike a will, which deals with a person's assets, a living will communicates a person's wishes in terms of medical treatment in the event that they're not able to make those decisions themselves.

For example, if a parent should suffer from severe and irreversible brain damage, would they want any treatments to help prolong their life? If so, for how long? Huddleston says you don't want to be in the difficult situation of having to act on a parent's behalf without knowing what they want. "You don't want to have to be the one deciding whether to keep them on life support."

Prepare for long-term care

There may come a time when your parents may not be able to perform everyday tasks like bathing, cooking, cleaning or taking their medications. So they may need extra help at home from a caretaker, they may need to go to an adult daycare or live in an assisted living facility.

But this long-term care, as these services are called, can be expensive. The AARP has a long-term care cost calculator that you can use to find the costs of a caretaker, adult daycare, nursing home and other types of care in your area. Ten hours of assistance from a home health aide in Lakewood, Calif., for example, costs about $2,666. And assisted living costs about $5,250 a month.

A long-term care insurance policy can help soften that blow, says Huddleston. It works much like home or auto insurance. You pay premiums and make claims if you ever need covered services – like adult daycare or a room in a nursing home.

She recommends that people start investing in them when they're in their 50s or early 60s, as the premiums grow as you get older. "These are not cheap, but they're a heck of a lot cheaper than the monthly cost of assisted living or bringing [a caretaker] into the home," she adds.

If you're unsure what kind of long-term care your parents can afford, consult a financial planner. You might think that financial planners are only for the wealthy, "but that's not true," says Huddleston. "Your parents can just meet a few times to have someone look over their financial situation, give them a few suggestions and create a plan for them."

Get access to their passwords

If there's an emergency and you need to log into a parent's bank account or contact their doctors through their medical portal, you don't want to waste time hunting down their usernames and passwords, says Huddleston. So ask your parents to make a list of relevant passwords, store it somewhere safe — like a password manager — and tell you how to access it.

Reassure them

If you're struggling to get your parents to talk to you about their finances and their plans as they age, reassure them that you're looking out for their best interests. By setting up these documents and coming up with a long-term care plan, "you can help them in the way that they want to be helped," says Huddleston.

Remind them: "I respect your independence and I want to help you remain independent for as long as possible. But to do that, we need to have some plans."

This episode of Life Kit was produced by Margaret Cirino and edited by Sylvie Douglis. The digital story was edited by Malaka Gharib. The visual producer is Kaz Fantone.

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