Talk to your parents about money: A guide to essential conversations

As an adult, you might think you’ve had all the important life talks, but it may be time to talk to your parents about money. Birds and bees. How generous the Bank of Mum and Dad can be. That first meeting with your intended.

But there could be another one to schedule in. A talk about their money.

Why you need to start the conversation now

You may feel that you have enough to do managing your own finances, and possibly those of your children. But you may need to think about your parents’ finances too. 

The sad fact is that they are not getting any younger, and unless they have their finances sorted out, their financial needs could impact you.

Six key topics to discuss with your parents

There are a number of topics that you might need to bring up.

1. Do they have any immediate money worries?

Your parents might have generous pensions, plenty of savings and a portfolio of investments, not to mention a home that has enjoyed stratospheric price growth. But they may have run through their cash as the effects of inflation bite and the value of pension income falls. Could they be finding it hard to make ends meet and not want to worry you?

When they feel comfortable sharing their financial situation, you could then be in a better position to support them.

2. Are their long-term financial plans robust?

We – and our parents – are living for longer. Increased life expectancy means a 65-year-old woman could expect to reach around 87 . It’s important to understand which sources your parents rely on to supply income, and whether they are robust enough to provide for another decade or two.

There could be care costs to consider. Even if they have the funds they need now, have they the resources they might need in future?

3. What is the plan for future care?

It can be difficult to talk about what your parents will do when they can no longer maintain a big garden or climb stairs.  

In the event of an illness, you’ll need to address whether they want to stay in their own home or move near, or even in with you. Would they want in-home care? Would they prefer moving to an assisted living facility?

If your parent loses the ability to remain independent, you’ll probably want to help, but you need to look at the financial impact of a move.

4. Where is the important paperwork held?

On a purely practical basis, do you have a record of assets and important documents and where they are held?

If they were to suddenly lose their capacity you would need a list of their bank, pension and investment accounts and the account numbers. If they haven’t already, you may want to consider asking them to put it all in one folder in a safe place that’s easy for you to find. Web-based storage services are increasingly popular and avoid the risk of things getting lost. 

One of the biggest estate planning mistakes is just simply that you don’t know where everything is that your parents own.

5. Is there an up-to-date will in place?

Check that your parents have made a will and kept it up to date. It is vital to ensure their wishes are known, and an important tool to help make sure that family wealth is passed on as they wish, rather than according to the laws of intestacy.

It’s also worth checking the beneficiaries of their life insurance policies or pensions are still as they want them to be. These are legally binding arrangements that may override bequests made in their will.

6. Have they considered a Lasting Power of Attorney (LPA)?

A Lasting Power of Attorney (LPA) is a legal document that would let your parents nominate a trusted friend or relative to look after their affairs if they lost capacity. 

You can explore the option for LPA at any time, as long as your parents are mentally stable and fully consent to the signing of LPA agreement. Without the appropriate LPA in place you may find you are not able to make a choice on their behalf, and you won’t have access to their finances even for things like council tax or care costs.

Expert help for your family’s future

Talking about money with your parents can be difficult.  They may want to avoid being a burden. You may be wary of the balancing respect for their boundaries with ensuring they’ve planned out their financial future.

But it can be vital for their future and for yours.

If talking to your parents flags up financial problems, the chances are that expert help could provide some solutions. 

Continuum offers comprehensive financial solutions for seniors, whether it’s maximising the potential of your savings or structuring family wealth to minimise tax exposure

If you’re ready to talk to your parents about money, we can help you navigate the financial complexities involved.

Here’s how long men and women can now expect to live | The Independent

This article is intended for general guidance only and is based on the opinion of Continuum it does not constitute financial advice. Individual circumstances vary, and you should consider seeking advice from a regulated financial adviser before making any decisions about your Savings, Investments, or retirement planning.

The Financial Conduct Authority does not regulate taxation and trust advice, will writing or power of attorney.

A pension is a long-term investment; the fund value can go down as well as up and this can impact the level of pension benefits available

Pension income could also be affected by interest rates at the time benefits are taken.

Pension savings are at risk of being eroded by inflation.