Our guest on the podcast today is Cameron Huddleston. She is an award-winning personal finance journalist and author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. She was a caregiver for 12 years for her mom who had Alzheimer's disease. She currently is the director of education and content at Carefull, a new service built to protect aging adults' daily finances. She received her B.A. in journalism and Russian studies from Washington and Lee University and her master's in economic journalism from American University.
Talking to Parents and Kids About Money
"Why I Wrote 'Mom and Dad, We Need to Talk,'" by Cameron Huddleston, cameronhuddleston.com, June 19, 2019.
"What I Teach My Kids About Money," by Cameron Huddleston, cameronhuddleston.com, July 10, 2019.
"Why You Should Talk to Your Adult Children About Your Finances," by Cameron Huddleston, getcarefull.com, July 29, 2022.
"Protect Aging Parents by Auditing Their Wallets," by Cameron Huddleston, getcarefull.com, Aug. 19, 2022.
"Financial Signs of Alzheimer's Disease and Dementia," by Cameron Huddleston, getcarefull.com, July 6, 2022.
"How Financial Advisors Are Becoming Financial Caregivers," by Cameron Huddleston, thinkadvisor.com, June 18, 2021.
"How to Help Your Parents Hire a Financial Advisor," by Cameron Huddleston, getcarefull.com, June 9, 2022.
"Estate Planning for Aging Parents: It's Never Too Late," by Peter Lauria, thebalance.com, Aug. 15, 2022.
"Why You Need a Living Will Now More Than Ever," by Cameron Huddleston, cameronhuddelston.com, April 23, 2020.
"Why You Need a Will or Trust," by Cameron Huddleston, getcarefull.com, Dec. 7, 2021.
Cognitive Decline and Long-Term Care
"6 Signs Your Parents Need Help With Their Finances," by Cameron Huddleston, getcarefull.com, Nov. 8, 2021.
"Your Parent Was Diagnosed With Alzheimer's. Now What?" by Cameron Huddleston, getcarefull.com, June 9, 2022.
"How Hybrid Life Insurance Pays for Long-Term Care," by Cameron Huddleston, forbes.com, July 26, 2022.
"How Your Risk of Financial Exploitation Increases As You Age," by Cameron Huddleston, security.naifa.org, Feb. 3, 2022.
"What to Know About the Different Types of Long-Term Care," by Cameron Huddleston, getcarefull.com, June 9, 2022.
"How to Talk to Your Parents About Long-Term Care," by Cameron Huddleston, June 9, 2022.
"Financial Risks That Make It Difficult to Age in Place," by Cameron Huddleston, getcarefull.com, Aug. 26, 2022.
"How Financial Care Is Part of Aging in Place," by Cameron Huddleston, getcarefull.com, Aug. 15, 2022.
"How Your Risk of Financial Exploitation Increases as You Age," by Cameron Huddleston, security.naifa.org, March 29, 2022.
"How to Guard Against Elder Fraud," by Cameron Huddleston, getcarefull.com, June 9, 2022.
Christine Benz: Hi, and welcome to The Long View. I'm Christine Benz, director of personal finance and retirement planning for Morningstar.
Jeff Ptak: And I'm Jeff Ptak, chief ratings officer for Morningstar Research Services.
Benz: Our guest on the podcast today is Cameron Huddleston. She is an award-winning personal finance journalist and author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. She was a caregiver for 12 years for her mom who had Alzheimer's disease. She currently is the director of education and content at Carefull, a new service built to protect aging adults' daily finances. She received her BA in journalism and Russian studies from Washington & Lee University and her Masters in economic journalism from American University.
Cameron, welcome to The Long View.
Cameron Huddleston: Hi. Thanks so much for having me.
Benz: Well, thanks for being here. We're excited to talk about this important topic. Your family story, and especially your mother's illness, her diagnosis with Alzheimer's disease, played a pivotal role in your focus on how families can better communicate and deal with financial matters as older adults age. Can you describe that experience?
Huddleston: Money was not really a topic that was discussed in my household while I was growing up. In fact, my dad always said don't talk about money, don't ask people about their incomes, don't ask people about how much money they spend to buy things. So, clearly, it was a taboo topic. And because I was a financial journalist, though, when I became an adult, money was something I was thinking about and talking about all the time. But because of that, the way I was brought up, and I wasn't used to having conversations with my parents about their finances, I hadn't had any detailed conversations with them when I was an adult, when they were adults. And so, when my mother was diagnosed with Alzheimer's disease, I had not talked to her in depth about her finances. I had a general idea of where she stood financially, but I didn't know any details. I found myself in a situation where I had to scramble to get the information I needed because I was going to have to be the one to care for her. She and my father had gotten divorced while I was in college. My father had actually passed away several years before she was diagnosed with Alzheimer's. And because I was the child who lived closest to her, I knew I was going to have to be the one to step in and help.
And looking back, I realized that was a big mistake on my part—not talking to her about her finances before there was an emergency that forced me to have conversations with her. And like I said, I had to scramble. I had to play detective. I had to make sure that all of the legal documents were in place to give me the right to make financial and medical decisions for her. And, of course, if I had to do it all over again, I would have had conversations with her sooner about her finances.
Ptak: I think we want to talk some more about this experience that you went through. But I do want to ask you, just reflecting on your own upbringing, it sounds like there was a reticence to discuss financial matters. Now that you're raising your own family, how are you handling that? And what did you learn from the experience that you went through with your own family where there wasn't really this discussion, and then you found yourself in a more precarious, tricky situation when it came to your mom and navigating some of those financial matters?
Huddleston: My husband and I talk to our kids all the time about money issues, and we have since they were young, not only am I a financial journalist, but my husband is an economics professor. So, money is a big topic of discussion in our house. And it's interesting because I remember once my middle child, when she was 11, she just came up to me one day out of the blue, and she said to me, "Mom, why do so many people think it's bad to talk about money?" Because in our household we talk about it all the time. And so, I answered her question as best as I could. In fact, I actually drew on some advice from a financial psychologist that I had interviewed for my book and told her that there's a lot of shame around money. People don't talk about it because they're worried that the person they're having a conversation with either makes more money than they do or less money, and that can create issues for people and their relationships with others. And so, we don't shy away at all from the conversation. I want my kids to not be afraid to talk about money. I want them to have a good understanding of money so that they can handle it responsibly when they are adults. I've even gone so far to talk to them about my plans for the future and how I don't expect them to support me in any way financially because their dad and I have taken steps to be financially secure. I think it's really important to have these conversations with your children from a very young age.
Benz: Going back to your mom's story and her experience with dementia, you talked about how you had to comb through her financial records, trying to figure out how well-situated she was with respect to managing the costs that would inevitably come along with her illness. So, what were the indications that your mother was experiencing cognitive decline? And maybe you can talk about those yellow or red flags perhaps that in hindsight were indicators that there was some issue happening.
Huddleston: Initially, I thought that her memory loss was not memory loss but rather hearing loss, because she did have hearing loss in her left ear that was caused by a benign tumor that she had behind that ear. And so, it was easy for me to say to myself, well, I don't think she is forgetting things. I just don't think she is hearing me well when I would answer her questions, and then she would ask me again not long after. This probably went on for at least a year where I was essentially in denial that there were any sort of memory issues. But then, I was at her house one night and I still remember this so well. She asked me if I wanted to go to her patio behind her house and look at this new bench that she had bought. So, we went, we looked at the bench, we came back inside, we continued talking and a few minutes later she asked me, do you want to see the bench I bought for my patio? And my heart just sunk because I knew this wasn't a hearing loss matter. She had forgotten that we had just gone outside and looked at this bench and she was asking me again. And I was mortified. I thought how am I going to deal with this? I didn't want to have to be the one to tell her that she was experiencing memory loss. I wasn't afraid of having conversations with her about her finances. I knew that those conversations needed to happen. But I didn't want to say, "Mom, you're forgetting things and we need to get you checked out."
What I did is, I relied on a third party to help me out. I reached out to her doctor, and I said the next time my mom is in there, can you encourage her to get tested for dementia? And he did, thankfully. And so, she went in, and she met with a neurologist. And after she had the testing done, she told me, “I'm OK. There's nothing wrong.” So, either the neurologist didn't do a very good job of examining her because I knew something was wrong, or she lied to me. And a few months later actually, one of her friends encouraged her to go see another neurologist, and that time I went with her to get the results of the test. And at that point, the neurologist said, you have Alzheimer's disease. But what was interesting is that he didn't really give us any instructions on what to do from that point. They talk a little bit about some medications that you can take, but there was no instruction on what sort of support she would need and certainly didn't say, hey look, now that you are experiencing memory loss, you're going to need someone to stay on top of your finances for you. But fortunately, as a financial journalist, I knew that she was going to need help. And we met with an attorney right away to update all of her estate planning documents to make sure that I was named her financial power of attorney, to make sure I was named her healthcare surrogate so I can make financial decisions for her and so I can make medical decisions for her. Fortunately, she was still cognizant enough to sign those documents.
Benz: One thing you discuss in the book is how if someone has experienced significant cognitive decline, you wrote that it might be too late for them to create an estate plan. It sounds like that it was a very narrow margin for you and your mom that she was able to get the right documents in place. But can you talk about that whole issue that if someone's dementia has advanced significantly and they don't have an estate plan, the complications that can arise in that situation?
Huddleston: Honestly, it can create a huge nightmare because you do have to be mentally competent to sign a power of attorney document, to sign a will, to sign any sort of legal document. And so, if you're working with an attorney, the attorney is going to ask you a series of questions to determine whether you understand what it is that you're signing because you're granting someone a lot of power when you name someone as your financial power of attorney. This person can make legal and financial decisions for you. So, of course, attorneys want to make sure that you are aware of what it is that you're signing so that you're not giving this power to someone who essentially can't be trusted and might exploit you.
If you are no longer competent to sign those documents, then you have to go through the court system or a family member or a friend is going to have to go through the court system to be named your conservator to make financial and legal decisions for you. Someone might have to be named your guardian to handle your healthcare. And this process can take several months. It can cost several thousand dollars typically. You're going to hire an attorney for yourself. You're going to hire an attorney for the person you're trying to essentially be deemed incompetent so that you can be named their conservator. There have to be doctors who testify that the person is no longer competent. You're essentially putting your parent on trial to prove that your parent is no longer capable of managing his or her finances on their own.
And there was a man I interviewed for my book who went through this process, and he spent nine months and $10,000. He also spent about $25,000 out of pocket paying for his dad's healthcare in a nursing home because his father had ended up in the emergency room and then a skilled nursing facility for rehabilitation, and his father had Alzheimer's disease and had not named his son power of attorney. And so, in order to access his dad's bank account and to pay his dad's medical bills, he had to go through the court process to be named conservator. And it could have been avoided if he had simply been named his father's power of attorney while he was still competent enough to sign those documents.
Ptak: Let's shift and talk about estate planning. What are the key elements of an estate plan that every older adult should have?
Huddleston: And I'm glad that you said every older adult, because a lot of people think estate planning is just something that wealthy people do. But all adults need a will or a trust, something that spells out who gets what when you die. Because if you die without a will, state law is going to determine who gets your assets. And so, if you have any desire to determine who gets your things when you die, you need to put it in writing. Otherwise, your family members get into fighting over who gets what. And people will fight over some really small things. So, you need a will or a trust. You need a power of attorney. The best is a general, durable power of attorney, someone who can make financial decisions for you if you can't.
So, just for example, if mom has Alzheimer's disease and you need to make sure her bills are paid, you cannot sign checks for her legally, you can't access her bank account unless you have been named her power of attorney and you've provided that document to the bank to show that you are indeed power of attorney. You need a healthcare power of attorney. It's also called a healthcare surrogate or healthcare proxy, someone who can make medical decisions for you if you can't. You also need an advanced directive. This is also called a living will, something that spells out what sort of end-of-life medical care you do or do not want so that, again, your family knows what your wishes are so they don't end up in court fighting over whether to keep you on life support. All adults need these documents.
Benz: Let's talk about the communication that it seems like should accompany those documents. I think in a lot of families, the parents, or the older adults go through the process of creating the estate planning documents. Then they just go into a drawer and don't get discussed with any other family members or loved ones who might be involved with eventual decisions. Can you talk about that component of it?
Huddleston: Your will and these other documents, it's not going to do any good to have them if no one knows where to find them. And like you said, this is what often happens. They go into a drawer. They go into a home safe or a filing cabinet. And the kids don't even know where to find these things. And if they don't know that they exist, then again, you could end up in court fighting over who gets what after mom and dad die because you didn't even know there was a will in existence. No one knows that they've been named power of attorney. So, they go through the court process to be named conservator, and it creates a lot of headaches. And so, it is really important to talk to your parents to find out if they have these estate planning documents.
It's also important when you try to have these conversations not to ask your parents something along the lines of, “Hey, do you have a will? I need to know what I'm getting when you're gone.” You don't want to look like you're being greedy, and that's not the point of having these conversations. You're not trying to find out what you're getting. That's up to your parents to decide whether they want to share that information with you. You just want to know do they have these documents and where are they located. If you're an older adult, you need to be letting your children, your family members know where these documents are located, how they can be accessed. So important for everyone to know where these documents are when emergencies arise.
Ptak: It seems important for older adults to talk through their own attitudes toward long-term care should they end up needing it and perhaps even formulate some kind of a long-term-care plan. What would that entail if they were to do that?
Huddleston: Well, for starters, you need to figure out how you're going to pay for long-term care. And I know a lot of us would like to think I'm never going to need it. I am going to live to the ripe old age of 95, and I'm never going to have to count on anyone for support because I'm in great health. Well, I thought my mom was in pretty good health, but she ended up being diagnosed with Alzheimer's disease at the age of 65, which is pretty young. She did not have long-term-care insurance. I did have that conversation with her before she was diagnosed with Alzheimer's disease. And she did attempt to get a long-term-care insurance policy, but because of that tumor that she had behind her ear, she was considered too high risk.
Long-term-care insurance is the one type of insurance that will cover the cost of long-term care. Medicare does not cover the cost of long-term care. Medicaid can cover the cost of long-term care, but you have to qualify, and that means having very limited income and assets. There are some veterans' benefits that can help cover the cost of long-term care. And what long-term care is, is assistance with the activities of daily living: bathing, dressing, eating, getting in and out of bed, going to the bathroom. This sort of care can be provided in your home. It can be provided in an assisted living facility, a memory care facility. It can be provided in with adult daycare. It can be provided in a nursing home, and it is incredibly expensive.
The median cost of one month of care in an assisted living facility is around $4,500, and that's just the median cost. If you are on the West Coast or the East Coast and a place where there's a high cost of living, it's going to cost a lot more. Individual room in a skilled nursing facility costs double that. My mother was in a memory care facility for eight years. Before that, even while she was living with me, we still hired caregivers to come into the home and help care for her while I was working, taking care of my kids. Over the course of that period, we spent more than half a million dollars on her care. And so, you have to make a plan to cover these costs. Now, of course, if you have retirement savings, you can dip into those savings. But if you are, let's say, the breadwinner of your family, and you're the only one who's been setting aside money for retirement, and you have a spouse, who's counting on those retirement savings too, if you're using all that money to cover your cost of long-term care, your spouse is going to be left without any income for her or for him in retirement. And so, there's long-term-care insurance.
There are life insurance policies with long-term-care benefits. You can potentially rely on a reverse mortgage. And like I mentioned, if you don't have the money to pay for long-term care and you have limited income and assets, then Medicaid can help cover the cost of long-term care, but it's difficult to qualify and it's quite the process to apply for Medicaid. Oftentimes, it really helps to have an attorney who specializes in Medicaid to help you get Medicaid benefits. But it's so important to plan for this sort of care because more than half of adults will need long-term care at some point.
Benz: What's the right age to plan for that care? It sounds like your mom, even though her diagnosis came fairly early in her life, she had that pre-existing condition that ruled out long-term-care insurance. When should people start formulating that plan?
Huddleston: Honestly, you should be thinking about this as soon as you are in the workforce and making sure you're saving enough for retirement, even extra, to pay for long-term care. You don't need to be thinking about applying for long-term-care insurance though until you are a little bit older. In your early 50s is a good time to think about applying for long-term-care insurance if you want to go that route. You still need to be healthy to get long-term-care insurance coverage. You're not going to get it if you've already been diagnosed with dementia, Parkinson's, anything like that that's going to require long-term care.
If you are in your early 60s and still in good health, you still might qualify for a long-term-care insurance policy. You're more likely to qualify for a permanent life insurance policy with long-term-care benefits. Those are a little bit easier to qualify for. But they tend to be more expensive and their long-term-care benefits are not as robust as they are with traditional long-term-care insurance. But in your late 40s, early 50s, that's really a good time to start thinking about it. And it's a good time to start having conversations, too, with your adult children. Certainly, if you're in your 60s, it's a good time to have conversations with your adult children about your care plans and whether you're expecting them to pitch in and help because it's going to impact your children financially if they have to help care for you. Caregiving can be a full-time job. And if they're going to have to step away from their jobs to care for you, of course that's going to impact them financially.
And I'll tell you, you don't want to do that to anyone, you really don't. That's why you need to have a plan. You don't want to force your children to care for you. I've told my kids I don't expect you to help care for me. I do want you, if I do need long-term care, to at least be there to make sure the bills are getting paid, to manage the financial side of things if my husband is not still around. But I don't want my kids to have to jeopardize their own finances to care for me. And so, these are things that you need to be thinking about sooner rather than later.
Ptak: You mentioned your kids. You were also busy raising your own children during the same period that you were helping your mom. Do you have any tips for parents of young children who are simultaneously attempting to aid their aging parents? And I know that one obvious one that that you've stressed rightly is have a plan, be proactive about it. What else?
Huddleston: My biggest tip is, give yourself grace. You need to not beat yourself up if you can't give 100% to everyone who needs your help. You cannot give 100% to your kids while giving 100% to your parent who needs care. You just can't do it. You have to accept that you can't be everything to everyone. And so, you have to make compromises. And initially, when my mom was diagnosed with Alzheimer's disease, my oldest child was 5 years old, and my now middle child was three and my youngest wasn't even born. So, my youngest was still practically in diapers and being potty trained. So, I had two kids who needed my full attention when my mom also needed my help. My mom was able to live independently in her home for about a year or two with some help. I first hired someone to drive her on errands, and then I hired someone to come in and keep her company a few days a week. And then, it got to the point where she just wasn't able to stay in her home anymore. And so, I moved her into my house, and that is certainly an option if you've got to care for a parent. If you have room in your home, that is something that can work for some families, and it's a good way for that parent who needs support. If they're still capable of taking care of themselves on a certain level, it's a way for them to continue feeling useful if there are children in the household and they are interacting with those children. They can build those bonds with their grandchildren, and they can sit on the floor and play with them, color pictures with them. It's a way for them to still feel involved and engaged, which is really important.
And then, I had to make the tough choice when it just got too much. Even while my mom was living with me and I had caregivers coming into the home, I could not juggle work and kids and caring for my mom, because at the end of the day, I felt that my patience had been exhausted and I was stressed out and I was not being a good parent to my own children. And so, I had to make the really tough decision of moving my mom into a memory care facility. And I was fortunate, because even though she didn't have long-term care insurance, she had the financial resources to pay for that sort of care. And so, you have to make really tough choices sometimes and you can't beat yourself up over it. You do the best you can.
Benz: I wanted to ask about aging in place, which I think many older adults, if you talk to them about how they would like to see their lives evolve, that would be their preference. But can you talk about that aging in place idea, the logistical challenges, and maybe talk through what older adults should know if they plan to stay put in their homes and perhaps bring in help if they need it to allow them to do so?
Huddleston: I actually just wrote an article on this topic. And an overwhelming majority of adults want to remain in their own homes as long as possible. But there are a variety of issues that can make this difficult. For starters, the home has to be accessible and meet their needs as they age, and so that means having a first-floor bedroom and bathroom. It means having doors that are wide enough to accommodate a wheelchair. If you are in a wheelchair, or if you have a walker, it means having handicap-accessible bathrooms with a walk-in shower, with grab bars to prevent falls. It means just even simple things like taking up the carpets and making sure there aren't thresholds on doors that you can trip over because falls can really lead to a rapid decline. And so, you've got to make sure the home is accessible.
You've got to make sure there's a support system in place. The biggest issue is being isolated. People think, well, I really want to stay in my home. I don't want to be at someplace else. But if you're isolated and it's just you, that's not good for your mental health or your physical health. It really helps to have social engagement. You're also at a much greater risk of exploitation if you're alone. So, you've got to have family members or friends who can be there to provide caregiving support, who can run errands for you, if necessary, who can check in on you and make sure you're safe, who can manage your finances for you. And if you don't have family and friends who can do it, you need to have the money to pay for someone who can come in and do these things. But then, if you're hiring someone to come into the home, that unfortunately does open the door to exploitations, so you’ve got to carefully vet any sort of household help, because we often think of scammers taking advantage of anyone at any age, but especially older adults. Well, the real threat comes from people who are close to older adults, whether that is a hired caregiver or even family members. So, there's got to be systems in place to protect you from exploitation as you age, and that means naming that power of attorney while you were still mentally competent, so someone is not going to take advantage of you if you are experiencing any sort of health issues or cognitive decline to persuade you to name them power of attorney so that they can essentially rob you blind if they want to. So, it takes a lot of planning, again, if you want to successfully age in place.
I'm not opposed at all to the idea of living in a retirement community, in an assisted living facility, a memory care facility, if I need to, when I'm older. In fact, I'm a proponent of assisted living. I know that sometimes it can get a bad rap. But when you are in that sort of situation, there are lots of people on staff, there are checks and balances. There's not just one person coming into your home and no one watching over them. You've got lots of aids on staff, so if someone can't make it in to work one day, there are plenty of other aids there in the facility who can care for you. There are cameras throughout the place. And there are people there. There's this whole team that is supporting you as you age. I think the scariest thing really is aging alone without that support system, because that's when you run into serious issues.
Ptak: The main thrust of your book is communication. And so, we wanted to draw on that. The book includes some helpful conversation starters for kids who want to talk to their parents about money. What are some constructive ways to broach the topic?
Huddleston: There are actually a variety of approaches you can use. I think it's a good idea, first, to think about reasons why your parents might be reluctant to have the conversation. Is money a taboo topic in your family? Are they going to be reluctant to have this conversation because it brings up the issues of aging and death? Do you think they might be embarrassed to talk about their finances because they haven't done a good job of managing their finances? Are they going to be afraid of having this conversation because it brings up the issue of role reversals and losing their independence? If you can pinpoint any reasons they might be reluctant to have the conversation, then you can avoid starting the conversation in a way that's going to bring up those touchy issues.
If money is not a taboo topic in your family and you have a good relationship with your parents, then go ahead and just be direct and let your parents know, “Hey, mom and dad, I really want to have some conversations with you about your finances so that I know what your wishes are, so that we can make a plan in case of emergency; so that I will be able to help you if you ever need help.” The key here is letting them know that you want to know what their wishes are, that you're looking out for their best interests and that you want to be able to help if they need that help.
If your parents, again going back to if they're reluctant, you might have to say something along the lines of, “Hey, mom and dad, this pandemic has prompted me to do a better job of planning for emergencies. I recently got a life insurance policy and I made sure I had a will and I just want you to know where those documents are in case something happens for me. By the way, do you have a will? Do you have a life insurance policy? Do you have other estate planning documents? Where can I find them if I need them?” Maybe you want to share a story about someone you know at work or a friend whose family did not do a good job of planning, and how many headaches it caused for your friend. Or maybe their family did a great job and how it made things easier for your friend when there was an emergency. Maybe you want to simply ask about “what-if” scenarios: what if something happened to you and I'm needed to make sure the bills got paid. How would I do that? Or maybe you just simply ask a general question. “How is retirement going for you?” And then, you just keep the questions going from there. “Oh, it's going well. Great. I guess maybe you did a really good job of saving for retirement and that's why it's going so well.” Or, “I'm sorry to hear retirement is not going as well for you. Is there anything I can do to help? Do you need any sort of support from me?”
This is not just one conversation. It's a series of conversations. You don't want to grill your parents for hours on end to get all the details that you need about their finances. You want to open the door, step in, look for those opportunities to keep the conversation going and gather information over time.
Benz: Once that dialogue has started, perhaps you can talk about the key items that adult children should be trying to get some information about. And I'm wondering if they can be bucketed into a few key categories like estate plan, long-term-care plan, which we've discussed, and then maybe the financial assets, the resources for retirement. Is that sort of a basic structure?
Huddleston: It is. So, you definitely want to find out do they have those estate planning documents? If they don't, encourage them to meet with an estate planning attorney or an elder-law attorney as soon as possible. And if your parents don't have the resources to pay for an attorney, perhaps you can offer paying for them as a gift. Happy Mother's Day, Mom. I want to make sure that you have a will, so I know what your wishes are. So, I've paid for you to meet with an attorney, so you can draft these documents. Find out where those documents are. Like you said, you do need to have conversations about long-term care. That might not be the first conversation you have, but it's certainly one that you do want to have at some point.
You want to get details about their finances to be prepared for emergencies like, what sort of bills they have and how do they pay for them? Are they paying their bills by check or are they set up to be paid automatically? And if they're not set up to be paid automatically, then maybe you want to encourage your parents to set up automatic bill payments, and you can help them do that if they need help. You want to find out what sources of income do they have, what sort of retirement savings they have. And you don't have to find out the dollars and cents. You just want to know is Social Security your only source of retirement income, or do you also have retirement savings that you're drawing from? Do you have investment properties? Do you have a pension? Are you still paying for a mortgage? Are you still paying for student loans that you took out for me or for yourself? You want to find out as many details as you can about their finances that they're willing to share with you.
And here's a good way to go about this. If they don't want to tell you the information, ask them to write it down, because this allows them to maintain control. And a lot of the issue here is your parents might not want to give up that control by having these conversations. Ask them, make a list of your accounts, include your usernames and passwords, include your Social Security number, your Medicare number; if they're on Medicaid, what's that Medicaid number? Tell them to write it down, put it someplace safe, and tell you how and when you can access that list, and then you know all that information is there and waiting for you if you need it.
Benz: You referenced this issue of control, and I think from a practical standpoint, some older adults might like that aspect of control they have, continuing to pay the bills by check or whatever way they were doing it, and I think it can put adult children in kind of an awkward situation where you're helicoptering, you're wanting to see that things are getting paid and going as they should, but you don't want to jump in there and take away the thing that is giving that older adult that sense of autonomy. So, do you have any tips on how to thread that needle where you're observing but not taking over?
Huddleston: It is tricky, isn't it? It's important when you have these conversations to let your parents know, "I'm gathering this information so that I have it in case there is an emergency." You can even tell your parents, "If you feel more comfortable and you don't want to share this information with me now, let's think about some situations when you might need my help. We can make a list of those situations. And at that point, maybe you're going to be willing to share some more information with me so that I can offer you the help you might need."
That's certainly one way to go about it, but you also want to let them know, “I'm not trying to take over here. I'm not trying to take control. I've got my own finances to manage, and I hope that I never have to end up in a situation where you're going to need help. I love to see you remain perfectly healthy. But it might happen. And if it does happen, I want to be able to help you, but I also want to be able to do things in a way that you want them to be done. And so, that's why I need to know, Mom and Dad, what are your wishes. What sort of care do you want if you need care? How do you want your finances handled? If I need to pay for long-term care for you, are you OK with me selling your vintage car? Or do you want me to hang on to that forever and figure out some other way to pay for it?” Let them know that you are looking out for their best interest and that you're not trying to take control. That's certainly one way to do it.
Another thing that you might try is to ask your parents if they're willing to let you have some insight into their finances by giving you view-only access to their accounts. And they might be like, “Wait, no, no, no, no. I don't want you to see what's going on in my bank account.” And this is something I learned from a neuroscientist who has done a lot of research into financial exploitation of the elderly. And he says it is so important to have a social safety net set up before you ever experience any sort of health issues or cognitive decline. It's important to have family members who know what your normal financial situation, your normal spending habits look like so that when something unusual happens, like you miss a couple of bill payments in a row, they're going to recognize that something might be wrong, and they can step in to help. You might want to mention this to your parents: “Would you consider giving me view-only access to your accounts?” Some banks will allow this to happen. They will let another family member give view-only access.
There actually is a service, and full disclosure, I work for this service. It's called Carefull. It's an account-monitoring service and older adults can sign up for it, and they're going to get 24/7 monitoring of their bank, their credit card, their investment accounts. It's going to alert them if there are any unusual transactions, if there are common money mistakes, such as duplicate payments or late payments. It also provides credit monitoring, identity monitoring, and you can add trusted contacts, such as an adult child, and you can determine what sort of information, what sort of access your child has. They can't actually make any transactions in those accounts, but they can see them if you allow those permissions. They can get alerts if you want them to have alerts; alerting them to a large transfer or a late payment, so then they can reach out to you and say, “Hey, Mom and Dad, I just got this alert that there was this unusual transaction that you just bought a gift card. I want to make sure you bought the gift card as a gift and not someone calls you on the phone and asked you to make a payment with a gift card.” So, that is something that you could discuss with your parents if they're willing to provide you that sort of access while they're still handling their finances, so that if there is a change in their ability that you're going to recognize it and you're able to step in.
Ptak: Another tricky variable in all of this is when an older adult has multiple children. So, in situations like those, do you think it's wise for one of the kids to take the lead on these matters and who should that be?
Huddleston: Well, if you're the one who happens to be listening to this podcast and you're thinking I need to talk to my mom and dad about their finances, I would encourage you if you have siblings to call a family meeting with your siblings, whether that's in person, on the phone, over FaceTime to let your siblings know that you think it would be a good idea to talk to your parents about their finances. And what you're going to do in this meeting is discuss whether it's going to be one of you or all of you who has the conversation. You're going to discuss when you're going to have the conversation; you're going to discuss how are we going to start the conversation? And you also want to discuss what roles each of you is willing to play in your parents' lives as they age.
And the reason I encourage people to do this is because if you decide you want to have this conversation with Mom and Dad, and you don't talk to your siblings, it might cause resentment, it might cause suspicion. They're going to think, wait, wait, why did you talk to Mom and Dad without including us? Are you trying to get in good with them so that they leave everything to you? You don't want that to happen. And so, it's really important to include your siblings from the get-go to have these conversations with them before you talk to your parents. The one caveat here is, if you have a sibling who has a really bad relationship with the parents, perhaps someone who has had issues with law enforcement, who has had issues with substance abuse, serious mental health issues and that sibling you feel like it might cause more harm, bringing them into the conversation, than good, then that would be the one situation where I wouldn't necessarily encourage you to bring that sibling into the conversation. But for the most part, it is really important to have those conversations with your brothers and sisters so that you can all get on the same page and decide who should be having the conversation with Mom and Dad.
And again, it might be one of you. It might be all of you. You guys can decide who's best suited to start the conversation. But even if you're the only one having the conversation; if your siblings are like, “Hey, we nominate you. You're going to do that?” Then keep them informed about what you learn from your parents. Keep them updated on how you're getting involved with your finances, if you do get involved, so that they, again, don't grow suspicious of what's happening behind the scenes.
Benz: That's a good advice. I wanted to ask about older adults who don't have children, which is an increasingly common profile. What steps should they take to ensure that their financial affairs are in order and that they're not a burden on nieces, nephews, other family members as they age?
Huddleston: You certainly have to identify at least one person who is going to be able to help you out if you need any sort of help, someone who can be your financial power of attorney, someone who can be your healthcare power of attorney and make medical decisions for you if you can't. If you don't have family members you are close to you can trust, maybe it's a friend, but I know in some states this is certainly a thing. I'm not entirely sure if it's in every state. I know in California, for example, you can hire professional conservators, professional guardians, someone who can manage your finances for you. I know some banks will handle trust. If you set up a trust and they can help manage that for you. Maybe it's hiring a daily money manager who can help oversee your finances and make sure the bills are getting paid as you age. If you're having trouble managing your finances on your own, there are professionals out there who can help. But you've got to identify someone who can help oversee your finances, make financial and healthcare decisions for you if you can't.
Ptak: What about a financial advisor? It seems like hiring a financial advisor could be money well spent as people in this situation age to help ensure orderly management of their financial affairs. Is that a best practice in your opinion? Or do you think you have to be pretty discriminating when it comes to the particular financial advisor that you would be looking to help out with those sorts of things to really make sure that they're focusing on more, I don't know if administration is the right word, but the day-to-day management of one's financial affairs?
Huddleston: I think it's a great idea, if you can, to hire a fee-only fiduciary financial planner. There are advisors out there who are commission-based and there is nothing wrong with that. But if they are commission-based, they do have an incentive to sell you products on which they will earn a commission. A fee-only financial planner is going to charge a fee for the services he or she provides. Fiduciary means that they are legally required to act in the client's best interest. And so, certified financial planners, look for that CFP designation. And a financial planner is going to be able to look at the assets you have and help you come up with a plan to ensure that your financial resources are going to last for the rest of your life. And that might mean coming up with a plan to pay for long-term care. It's going to come up with retirement income strategies. And so, it's definitely a good idea to hire a financial planner, if you can. There are some financial planners who only charge by the hour. And so, maybe it's someone you just have a couple meetings to come up with a plan.
If you are lower income, the Financial Planning Association, you can reach out to the chapter in your state, and there might be some of its members who provide pro bono work. So, that's an option. But a financial advisor typically will not handle day-to-day financial matters. And a financial advisor also cannot be named your power of attorney. This is a conflict of interest. You can't have the person who is creating the plan for your finances to be technically handling those finances for you. They can't be the one who is taking the money out of the account. And so, you can't name your financial advisor as your power of attorney. You've got to have someone else in that role. And so, again, if you need help with day-to-day money matters, that's going to be a daily money manager who is going to do that.
Benz: Cameron, you referenced the issue of elder financial abuse and financial fraud. One key worry among older adults and adult children is that there could be some sort of financial abuse or fraud perpetrated upon them. Can you outline the best practices to ensure that that is at least less of a risk?
Huddleston: Again, make sure that you have named a power of attorney while you are relatively young and healthy. So, it is someone you trust to be in charge of your finances. You don't want to wait until you are experiencing certain health issues or cognitive decline, and you haven't put that document into place because someone might be able to persuade you to name them and it might not be the person you would have chosen while you were still healthy and mentally competent. So, make sure you've named that power of attorney.
Make sure that if you are aging in place that all of your financial documents are secured someplace safe. They're not left out in the open. They're not in a drawer that can be easily accessed. You don't want that information lying around because if someone gets their hands on it, they can steal your identity. They can steal directly from your accounts. Make sure you have a strong support network, someone who is checking in on you regularly. Freeze your credit so that someone cannot use your identity to open lines of credit in your name. There are lots of things that you can do. Use an account monitoring service so you can be notified in case there are unusual transactions on your account. Make sure you have credit monitoring. But it takes a plan. You can't wing it and hope that everything is going to turn out OK.
Benz: Well, Cameron, this has been such a great conversation, a heavy conversation, but I think an important one. Thank you so much for taking time out of your schedule to be with us today.
Huddleston: Thank you so much for having me.
Ptak: Thanks again.
Benz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.
You can follow us on Twitter @Christine_Benz.
Ptak: And @Syouth1, which is, S-Y-O-U-T-H and the number 1.
Benz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.
Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email us at TheLongView@Morningstar.com. Until next time, thanks for joining us.
(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis, or opinions, or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)