How to navigate tricky conversations about finances and health with your aging parents

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In an ongoing series, the Financial Post explores personal finance questions tied to life’s big milestones, from getting married to retirement.

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Given that the average life expectancy for Canadians in 2019 was 82 years, according to the World Bank, compared to 78.9 years in 1999, many, if not most, healthy people can expect to live for a long time.

But many issues can crop up in seniority, from the cognitive to the physical to the financial, often all three intertwined, and that sometimes means people’s children have to step in to fill the gaps.

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For instance, a pension may prove insufficient to get by on, or the parent proves incapable of managing some financial aspect of their lives. It can even be as simple as the need to downsize homes.

It likely won’t be easy for their adult offspring to help, given the relationship between child and parent is typically wrapped up in complicated feelings such as pride and protection. But Jason Heath, a certified financial planner at Objective Financial Partners Inc., said it’s important for both sides to be receptive, to approach the situation slowly and hope for the best.

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“For some people, it doesn’t even need to be specifics about their parents or about their finances, it could be as simple as (telling them), ‘If something happens, here’s who you talk to. This person is my adviser, this person is my accountant, this person is my lawyer,’” Heath said.

“On the other side of long-term care, those are awkward conversations to have, but I definitely encourage people to have them. To ask, ‘If something happened, and you had a cognitive impairment, where would you want to be?’ Sometimes you don’t get the opportunity to ask those questions.”

The same applies to simpler situations in which the parents may need extra help around the house, such as hiring someone to shovel their snow for them.

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Whatever the case, one shouldn’t assume that having siblings will necessarily make things easier. Arguments can arise over who is chipping in with physical help, financial help, not enough help or any at all. An out-of-province sibling won’t help matters either.

Heath notes there can be unfortunate occasions where kids split the money up once their parents are moved into a care facility, rather than keeping it for any possible emergencies.

The parents’ finances can’t be a black box

Jason Heath

It’s also important to not separate the health concerns of aging from the financial ones. In many ways, they are one and the same.

“Siblings can work together to delegate medical appointments, or who’s going to help with bill payments. Who can be a financial support, if that’s needed?” said Bev Evans, portfolio manager, wealth adviser and investment adviser with the Evans & Carruthers team at Richardson Wealth Ltd. “Who can be there on a more of a day-to-day basis to make sure that the parents are safe and have what they need?”

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She adds that such conversations need to be rooted in respect and dignity. Barring the most dire scenarios, the children should not dictate the terms and the parents have to be part of the decision-making process.

Like many situations involving family, things have the potential to become more than a little tense. Evans recommends bringing in a third party to alleviate much of the emotion that can naturally arise.

That can include financial advisers, but Heath also worked with a long-term care consultant for his mother who “initiated family discussions that we didn’t know we needed to have.”

If the issue is as straightforward as downsizing to make things easier on the parents’ lives, all of the above still applies, but there’s an extra challenge of convincing someone that their life may be more enjoyable if they moved into a smaller home.

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“Considering property values and that we’re living longer, the principal residence for many older people continues to be their single largest asset,” Evans said. “There comes a point when downsizing and taking equity out of the home can really unlock a lot of options for the older person to take on a new way of life that gives them a lot more freedom and flexibility.”

Both seniors and their adult children can have a lot of what Evans calls “misconceptions” when it comes to the available options beyond living in your own home. For example, long-term care homes often have years-long waiting lists, so it may be beneficial to start looking at future needs early if you’re made aware of a potential health issue with your parents.

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Aside from any health problems that come with aging, there’s also elder fraud to contend with. Both Evans and Heath agree such fraud can be difficult for adult children to spot unless they have some knowledge or access to their parents’ finances.

That’s why a base level of trust needs to exist between generations while maintaining the parents’ privacy. Ideally, “the parents’ finances can’t be a black box,” Evans said.

Like everything else when it comes to finances, the key is in cautious and open communication.