Growing up, many of us were taught by our parents to never talk about money. The subject is viewed as being taboo, like discussing your political or religious beliefs. Adult children who grew up with this mindset typically feel uncomfortable broaching this difficult subject with their aging parents. A July 2005 study conducted by Allianz Life Insurance Company of North America and Dr. Ken Dychtwald, one of the nation’s foremost gerontologists, found evidence of a wide gap on the views of inheritance and legacy between the elder generation and their baby boomer children. According to the study, $25 trillion in wealth is to be handed down by the elder generation, $7.2 trillion of which will go directly to the boomer children.

Many adults are in denial about their parents’ mortality and avoid asking questions about their estates and wills. Oftentimes they do not want to appear greedy about their inheritance or controlling of their parents’ personal matters. However, not discussing this vital issue can lead to significant and irreversible problems in the future.

Today, we live in an age where planning ahead makes all the difference. The elder generation who was taught to save every penny is now experiencing considerable wealth due to burgeoning real estate and smart investments. In turn, they need to preserve those assets to plan for future life changes. Many families do not discuss finances until a crisis occurs and then it can be too late. It is far easier to talk with parents when they are healthy than when they are incapacitated or hospitalized.

Adult children can play an important role in making sure their parents’ estate is in order, as well as ensuring they are financially capable to take care of themselves for the remainder of their lives. Statistics show people are living longer and their retirement savings must be stretched to last a lifetime. It is likely that at least one parent will need some sort of assisted care in their elder years, making long-term care insurance a very wise investment.

The American Health Care Association estimates that the cost of a nursing home can exceed $50,000 a year, while assisted-living facilities average $24,000 annually. If elderly parents are not prepared financially for that care, the burden may rest on their children. This is especially common among baby boomers today. Many have taken on the responsibility of caregiver, which can become financially draining considering they already have their own monetary obligations. According to the 2001 “Retirement Reality Check” survey by Allstate Financial, the ratio of 1-to-6 (16 percent) of baby boomers currently assists elderly parents or in-laws financially.

By having open discussions with aging parents now, you can help to improve their financial health, reduce potential problems and ease burdens in the future. The following tips should help to make that conversation easier and more productive.

1. Pick the right time to talk. You want to make sure to have the conversation when you won’t be interrupted and when everyone is relaxed. Having this discussion during the holidays may not be the best time. You also might want to cover things in more than one conversation.
2. Maintain a sensitive stance. Don’t be judgmental of your parents. Remember, this is a difficult subject for them to discuss. You may not agree with their decisions, but keep in mind they are competent adults. A good way to set the right tone is by saying, “It’s important for me to understand your finances in case I need to help you in the future.” You could even begin by discussing your retirement strategy or plans in the event of your own serious illness or death. This helps to open the door to communication and makes it an interactive conversation where they don’t feel they are being questioned.
3. Involve an expert if needed. There are many resources available, such as financial planners and certified public accountants, that can help manage later life decisions and financial issues for families. In some cases, it might be easier for your parents to talk about these matters with an outsider than with a family member.
4. Make a list of assets and liabilities. This is an important place to begin once the conversation starts. You’ll want to note the date and cost of assets, as this information will be needed for tax purposes if any assets are sold.
5. Establish arrangements for financial management. Your parents will want to consider establishing a durable power of attorney. This is a legal document that enables someone to designate another person to act on his or her behalf should they become disabled or incapacitated.
6. Know where important documents are kept. Make a list of all important documents, including birth and marriage certificates, wills and trust agreements, Social Security records, burial instructions, insurance policies, bank and investment statements, mortgage and real estate deeds and auto ownership records. Be sure to get bank information, including safe deposit box number and key location. Also make a list of important contacts with phone numbers such as financial advisors, doctors and attorneys.
7. Review estate planning and investments. If they haven’t done so already, encourage your parents to develop a plan to maximize their legacy for their heirs. Also be sure to discuss their investment strategy so you have an understanding of their financial well-being. This will help you plan ahead for any assistance you may need to provide down the road.
8. Understand your parents’ healthcare wishes. You’ll need to know where your parents stand on healthcare issues should they ever become incapacitated. If that should occur, long-term care planning is essential. Depending on their situation, long-term care insurance may be appropriate to help absorb the costs associated with nursing homes or at-home care.