Proverbs 27:12 says this: “The prudent see danger and take refuge, but the simple keep going and pay the penalty.”
In this episode of The Stewardology Podcast, we want to focus on the beginning part of this verse, “The prudent see danger and take refuge.” We are going to discuss the Biblical basis along with the why and how we ought to talk to our elderly parents about their money and finances. One of the key reasons is to be prepared for emergencies. This is why we opened with Proverbs 27:12, “the prudent see danger and take refuge.” The prudent, the believer in Christ, is one that ought to plan and prepare. In doing so, they look ahead and foresee what issues and complications could come their way and they devise a plan ahead of time!
A good discussion with your parents about their finances AHEAD OF TIME will allow you to:
- Know the extent of their estate.
- Know how they have planned for their financial future.
- Seek Godly counsel.
- Prepare for and provide for future needs.
- Create living and care plans for a surviving spouse.
- Plus much, much more…
But first, is what we are going to talk about in this episode even needed or necessary? Is it Biblical? Of course it is!
Why ought the children of elderly parents have an open, honest and sensitive conversation about money and finances with them? We base our premise on Scripture, specifically 1 Timothy chapter 5 and verse 8. It says, “If anyone does not provide for his relatives, and especially for his immediate family, he has denied the faith and is worse than an unbeliever.” (NIV84)
- 1 Tim 5 – if anyone does not provide for “their own…” This INCLUDES his aging parents. They would be considered “his immediate family.”
- Interesting, this Greek word that Paul uses is the word PRONOEO…which means:
- generally think of beforehand, perceive ahead of time, foresee
- Friberg, Analytical lexicon of the Greek New Testament 2000 : 330. Print. Baker’s Greek New Testament Library.
- to care for or look after, with the implication of continuous responsibility—‘to look after, to take care of, to see to.’
- Louw, Nida. Greek-English lexicon of the New Testament: based on semantic domains 1996 : 462. Print.
As per Paul’s command to Timothy, we as believers ought to think ahead of the elderly days of our parents. We should foresee issues, complications and problems, and come up with a mutual plan to care for and look after our parents in their elderly years! This is providing a return to your parents. As parents once invested SO much into the lives of their children, now in the elderly years the children are to show a return of investing to their parents in their later years!
What are some of the “Why’s” that you need to approach your parents about?
- Is there a sibling that is a black sheep? (They could cause financial strain and issues with the elderly parents without the other siblings knowing)
- Who is the executor of the estate? And/or do they have a will and any funeral arrangements pre-planned?
- What physical assets do they have? (A chance to learn to care for their property)
Considerations Prior to having a Conversation
- Who should be in the conversation? Should we just keep it between you and the parents? Should We involve the whole family?
- Be Proactive – Don’t wait until there is a crisis, financial or otherwise
- Approach with respect.
- Talk big picture.
- Try not to talk about specific accounts, unless they bring it up.
- If possible, seek advice…ask questions for you to learn.
- Respect their past decisions, even if different from your processing/thinking/beliefs.
- Approach with humility.
- Become a learner.
- Do not make the conversation of right and wrong. Make it a learning time to desire to make things better and more sustainable.
- Acknowledge need/desire for parents independence.
- This is a big issue for aging adults! They want their independence and for you to respect that. It may come down to having a conversation about being “ready” for additional care either in home or at an assisted care facility. Have those conversations as early as possible! Then, set certain criteria of when things need to move from conversations to actions.
Assess your Parents
As you assess where your parents are, discuss their medical and financial situation.
Step 1: Gather information (with your parents) – As you assess where your parents are (do it WITH THEM), Speak with them openly and honestly about their medical and financial situation.
- Where are they financially? (Balance sheet & budget)
- Gather statements of bank, investment, insurance policies, Real Estate, collectables (stamps, coins, other), Debt (CC statements, car loans, mortgage…).
- Figure out a net worth (Assets – Liabilities = Net Worth).
- Identify All income sources (salary, Social Security income, pensions, investments). What is guaranteed? What will change at the death of the first spouse?
- Understand expense (budget).
- How is their health?
- Get a list of all Doctors and other medical specialists that they are seeing.
- List all current medications and their purposes.
- Legal Documentation
- Gather Will, Trusts, Power of Attorney Documentation.
- Verify that they are signed and reflect their desires.
- Do they have Medial & Financial Power of Attorney?
- If there are Trusts, are they funded? What is their purpose?
Step 2: Create A Proactive Plan
- Phase 1 – Happily Independent
- Parents are healthy and financially well enough to maintain their own residence/home. Some minor assistance may be needed for yard work or home maintenance.
- Phase 2 – Independent with Support
- They are still well enough to be independent but need some support with medication or mobility. Care team (family/church/professional) may come in weekly or daily to provide support.
- Phase 3 – Dependent with Family
- Parents may need more oversight. Grown children may be encouraged to move in with parents or parents to move in with grown children.
- Phase 4 – Dependent in Professional Supportive Environment
- This is the phase most want to avoid. It provides the least independence and the most care. Investigate possibilities of an Independent care facility that progresses to full care and dementia units. Unfortunately, costs can become prohibitive and may burn through assets quickly. At this point, parents may become dependent on Medicaid. Consider purchasing Long-Term Care Insurance if this looks like a possibility. It is also important to discuss options to protect assets for the surviving spouse and family. Medicaid crisis planning may be necessary. Consult a Financial Advisor as well as an Elder-Law Attorney for more advice and counsel.
Step 3: Monitor and Adjust the Plan as Needed. If the plan is not working for the parents or the grown children, an adjustment may be necessary.
- The Wealthy Parent.
- If your parents are well-off, you should still attempt to have a conversation with them. Don’t just let them run their own course because you will have to manage their estate someday.
- The Private Parent.
- Attempt to have a conversation with your parents. However, in this situation, allow them to lead the conversation.
- The Basket Case Parent.
- Advance the plan and get help if needed.
- The Parent with Dementia
- If there are other siblings, it would be wise to speak to them and let them know what is happening with the parents. Be careful to make changes without the advice or counsel of an attorney. Some people THINK that they know finances, taxes and laws, but they very well may not know the details, and it could cause undue financial and tax implications on parents or family members! Consulting an Elder Care Attorney would be a VERY good choice.
- The Stubbornly Independent Parent
- You most likely will need counsel and direction from experts and those that have been down this road. What counseling is out there?
- Family. The family needs to be on the same page as you move forward in conversations.
- Pastor/Church Leaders. Many Pastors have walked down these roads with other congregants through the years.
- Attorneys. Elder Care Attorneys can be a great asset in helping you in your decision making process.
- The Counsel of the Godly.
Bring in those that you know, love and you know love the Lord! Seek their wisdom and advice! Especially bring in to counsel those that have been there or going through what you are about to, or involved in right now!
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