Family and money—the combination can be tricky, and when it comes to talking about finances with aging parents, years of communication and family culture can often get in the way.

That’s why many financial professionals say that using a sensitive, respectful, and tactful tone with adult parents may make financial conversations easier.

“It is a sensitive topic,” says Kurt Rossi, CFP®, a chartered retirement planning counselor (CRPC®) based in New Jersey. “Parents can often be tight-lipped. The children are also sensitive because they don’t want to come off as inquiring about their future inheritance.

“Many people wait too long to have that conversation with their parents,” Rossi adds. “Adult parents are often a little sensitive, especially if they need help. Many of my clients tell me ‘I wish my children would get involved and ask me if I need help.’”

Even if your parents seem physically and financially stable, you may want to initiate a conversation about finances early to adequately understand their caregiving and financial preferences before the management of elder care becomes a factor. Once an adult parent becomes sick or needs care, having a discussion about finances and life insurance can become even more challenging.

Here are six approaches that adult children can take that may help create a positive discussion of finances with aging parents.

1. Talk about your finances, but keep it conversational.

To put parents at ease, consider discussing your own financial planning. For example, Rossi suggests mentioning a recent personal visit to a financial planner and the methods you are using to plan your    finances. That can help you ease into a conversation with your parents about their finances.

“Having an estate planning conversation is the most comfortable way to introduce a conversation that then branches into other topics,” says Rossi, who also serves as president of New Jersey’s Independent Wealth Management, a financial services and wealth management firm. “It’s a nice segue to start saying, ‘Mom and Dad, do you have an estate plan, a power of attorney, and a will?’”

By taking that approach, Rossi says it becomes more conversational and less like an interrogation. “If there’s one child who is the more financially responsible one, then it’s good for that child to have the conversation because the parent might be more comfortable with that child,” Rossi says. “But regardless of the situation, it’s important to have that conversation.”

2. Take inventory of any assets, and determine the location of all important documents.

Nationally, there is $41.7 billion in unclaimed property, according to the National Association of Unclaimed Property Administrator, including unredeemed savings bonds, uncashed Social Security and retirement checks, and IRS refunds. “There’s also $2.5 billion of uncollected life insurance because there is a disconnect between the beneficiaries and owners of the life insurance policy,” Rossi says. “The heirs don’t know about the policy. The next thing they know, [the policyholder passes away]. It’s a good idea to fully disclose before that point.”

For this reason, it’s important to know which records and documents exist and where they are. These may include:

  • marriage certificates
  • birth certificates
  • each parent’s will
  • power of attorney and other healthcare proxies
  • living will information
  • financial account information
  • tax returns
  • details about the existence of and location of any safe deposit boxes
  • military records
  • titles to property
  • health insurance documentation, including that for supplemental insurance
  • life insurance and any other insurance policies
  • all information about any prescriptions and medications
  • banking records
  • trust documents

3. Review policies to make sure that any existing power of attorney or living will is current.

“Make sure [the document] is not 25 years old because some financial institutions won’t accept a power of attorney if it’s older than five years,” Rossi says.

Also important is reviewing any life insurance policies to make sure the coverage is appropriate to help pay for funeral expenses, estate taxes, a mortgage and any automobile payment, or any other debts that might be left behind, and whether the policies can replace income with a nontaxable death benefit.

4. Gently ask whether your parents might need help financially with credit cards, electric bills, or other expenses.

One resource that can help is BenefitsCheckUp, a website run by the National Council on Aging. It offers assistance for those who need help paying for medications, health care, food, and utilities.

5. Create a contact list of important names, phone numbers, and email addresses to be used in an emergency.

This list could include the following:

  • financial advisors
  • life insurance agent
  • attorney
  • doctors
  • executor of the will
  • family members

In addition to this important list of resources, an elder law attorney can also help with the legal concerns that come with senior needs. Members of the National Academy of Elder Law Attorneys (NAELA) are experienced in navigating the legal landscape that accompanies preparing your aging parents for this next stage.

6. Be sure to include all family members in the discussion and to determine if both the parents and the children are handling their respective investments properly.

Parents may want to make sure their children are prepared to handle investments, especially if there is a sizeable asset, says Rossi. “If they’ve built wealth, often times, the children aren’t prepared to handle it,” he says. “Sometimes parents think they’ve done everything right, and they might not have, which is why you want your children to be in a position to handle the financial assets rather than be thrown into it.”

Conversely, Rossi says it may be important for children to examine the investments of an adult parent to make sure they aren’t taking unnecessary risks.

For example, Rossi had an 85-year-old client who had 85 percent of her investment in the stock market. “The children thought their parents had a good handle on their investment, but [the investments] were way too aggressive,” explains Rossi, who says the client lost most of her net worth and didn’t have time to ride out the stock market as younger investors might. “It’s important to make sure they aren’t buying penny stock and that they have an appropriate mix. Police what the parents and financial team might be doing.”

Just as important is not leaving either parent in the dark, he says. “If one spouse passes away, it can be very overwhelming for the other spouse because in many relationships there’s one person who takes the lead,” Rossi explains. “It’s another good reason to have this conversation before either parent passes, especially if one parent handles more of the financial planning, so the other parent is aware of what is going on.”