Money talks you shouldn't skip

Discussing finances with aging parents might be difficult, but it can head off more complex issues in the future if their health goes awry.

The challenge of helping aging parents is one of the most common issues I see as a financial adviser. One client's father, who recently was diagnosed with dementia, couldn't remember where his financial records or money were kept. My client is now in a gut-wrenching situation, trying to find important documents while caring for his ailing father.

Most people don't like talking about money, death or incapacity. But by having difficult conversations and focusing on key areas of your parents' well-being, you can help alleviate the administrative and emotional burden of caring for them.

Here are some of the most important financial issues, decisions and plans to discuss with your parents:

Most people know they should have a will in place but may not be aware that their families also may benefit from creating a living trust, a legal document that designates which beneficiaries will inherit their assets. The biggest difference between a trust and a will is that assets included in a properly executed living trust do not go to probate, the legal process of distributing property after a person dies that can be tedious and time-consuming.

While your parents are strong and lucid, work with them to set up a living trust. This will help you, or whoever is designated to sort out your parents' estate, avoid an administrative nightmare. A living trust may be more expensive to set up than a will, but it will allow your parents to do smart tax and estate planning to protect their wealth. It's best to consult a professional estate-planning attorney for this process.

It's never too early to start planning for long-term care, even though there's no way of knowing if you'll need it. The U.S. Department of Health and Human Services expects the duration and level of long-term care to change over time. But it says there's a nearly 70 percent chance that a 65-year-old will need some type of long-term care, and some people will need it for more than five years.

Will your parents be able to stay in their home? Will they need round-the-clock care at a senior facility? Will they move in with you? It's vital to talk about housing alternatives and what may happen if your parents can no longer get around easily without help.

Evaluate different senior housing options such as independent living communities, assisted living, nursing homes, Alzheimer's care, respite care and residential care homes. Compare costs and benefits to see what and how much is covered by long-term care insurance. Have a budget and plan in place long before your parents actually need to make a move or get in-home help.

If your parents can't remember where they keep their money or other basics, would they be fit enough to perform other functions such as driving? Besides needing to protect our parents, we also have a greater responsibility to ensure that they aren't a threat to anyone else. What is the plan for when your parents can no longer drive themselves?

If your parents are healthy, check to see if they can save some money while driving. Some insurance providers reward older drivers with senior car-insurance discounts for simple things such as taking a driving class or driving fewer miles in retirement.

For most people, conversations about money, death or incapacity won't be easy. Studies have shown that adult children and their parents often face a disconnect over money issues. Many families have trouble communicating about who will make financial decisions on behalf of parents if they lose the ability to handle their money safely. Other families tend to disagree on the role children should play in the care of their parents.

Despite the discomfort, talking with your parents about their health and wealth as they age is incredibly important. By showing your parents that you are looking out for their best interests, you can try to avoid conflict and even greater challenges later on. Being informed and having clear lines of communication with your parents about their finances and other key issues will make taking care of them much easier.