Angela Alvig, CPA

Role Reversal with Aging Parents: Part 1 - Getting Their Finances In Order Without Losing Your Sanity

Published 2 Months Ago5 minute readInsights from Angela Alvig

Remember your easy days of childhood? Your parents drove you to appointments, fed you, reminded you to do your homework, made phone calls on your behalf, signed you up for classes, encouraged you to pursue hobbies and join clubs.

Did you ever suspect the roles might be reversed someday?

I’m sure it comes as no surprise now. If it’s not happening in your family, you’re seeing other households navigate caring for declining, elderly loved ones. 

It’s a bittersweet sensation. You’re happy that you can help your parents in such a loving, tangible way. Yet witnessing their decline is painful, and embracing that reversal of roles can invite feelings of sorrow and grief, along with overwhelm.

The Sandwich Generation Cares for Both Parents and Children

For folks who are still actively parenting their minor children, it can be even more difficult. 

When surprise emergency room visits can involve eight-year-olds AND 80-year olds? That’s a lot of stress. Some call your situation “the sandwich generation,” describing the dual stresses as you face family responsibilities from both above and below. 

For both children and elderly, there are so many aspects of well-being that need to be addressed: Health, social engagement, safe living environments. 

My focus, of course, is financial well-being, for both you and your parents.

Get a Detailed Overview of Your Parents’ Financial Life

Whether or not your parents are demonstrating decline in their ability to manage their affairs independently, it’s crucial that you prepare yourself for eventually getting involved in their finances. The future is unpredictable and any of us can confront a sudden health issue which renders us less capable of taking care of our own business. In the case of the elderly, the odds of that happening increase as the years fly by. 

Plan to have a frank and forthright financial conversation with your parents as soon as possible. Your siblings and perhaps other involved family members should participate. Communicate gently and lovingly that you support their self-governance and hope they’ll maintain the capacity to stay in charge of their own finances. Explain that it’s your responsibility, as the adult offspring, to prepare for the worst. Ask for their help, support and cooperation in this project. Tell them you would very much appreciate their help in doing this proactively and not reactively. Plus, it might be a fun bonding experience! After all, most parents love spending time with their children, no matter the reason.

Block out a chunk of time, bring a pad to take notes, and arrange your meeting somewhere you can access their hard and digital files together. Put together a binder or a file that will become your road map, to enable you to hit the ground running, should your parents lose their ability to keep track of their finances. 

Ask Questions, Record Answers

Here are some questions to get you started.

  • Where are your financial records? 
  • How do you keep track of your passwords? 
  • Do you have safes, lock boxes, safe deposit boxes? Where are the keys, what are the combinations?
  • Do you have an accountant, financial planner or attorney? Have you done any estate planning? Get names and contact info. 
  • Where are your bank accounts? 
  • Where are your investments held? 
  • What is your mortgage company? 
  • Are you comfortable sharing account numbers? Balances or equity? 
  • What is your annual income? Where does it come from? Are there pension checks, investment dividends, alimony payments?
  • Do you receive Social Security or other government assistance? What permissions do offspring need to manage these accounts?
  • How do you pay your bills? Do you use online banking or paper checks? Are there automatic deductions from your checking account?
  • What are your monthly expenses? Draft a rough budget including mortgage/rent, car payment, utilities, debt, and other recurring expenses.
  • Is charitable giving part of your annual expenses? Is your philanthropy affordable and strategic? 
  • Have you named a durable power of attorney to manage your finances? If not, take steps to designate one. Without a POA named, offspring will have to go to court to get legal guardianship of their parents in order to access accounts on their behalf.
  • Have you written a will? Is it up to date? Where is it?
  • What pays for your health care? Medicare, Medicaid, private insurance? Do you get health insurance from an employer or a former employer?
  • Do you have long-term care insurance? Examine the plan to make sure everyone understands what it will cover in terms of care and housing.

Financial Overview Pays Off

I can’t overstate the benefit of getting a thorough overview of your parents’ financial situation before a crisis hits. Engaging with them about their financial state may also put a little fire under them to make sure things are in order. 

Should they truly need your help, gradually or suddenly, you’ll be glad you won’t have the additional stress of understanding their financial state from the ground up. Ask the questions, consolidate the info, and your path will be much smoother. 

If you are overwhelmed with trying to manage your parents' finances and would like some help, I'd love to have a conversation with you. Please call me at 612-203-2718.