"GMA" financial contributor Mellody Hobson offers tips on beginning this all-important conversation. Check out her advice below.
When you first approach your parents, make sure you do it in a warm, loving way where you talk about your own thoughts about the future.
Do not be direct or confrontational, but show that you are concerned. If you find an opportunity to open a dialogue with them, then take it.
For example, if you recently opened a retirement account, then use that opportunity to talk to your parents about their retirement savings. Offer to help them in any way possible.
The most important step in this whole process is opening up this communication line. Do not get frustrated if it takes you several rounds of communications to get your parents' trust on their financial issues
It is important to have this conversation as soon possible. You do not want an emergency to dictate your plans.
Now that your parents have accepted your help, it's time to get organized. Find out where they keep all of their financial and legal documents.
These documents include wills, durable power of attorney, medical power attorney, insurance policies, bank accounts, and so on. The AARP's Web site has excellent forms that can help you organize your parents' documents, and they have other resources that may come in handy in the process.
You can also help your parents get organized by simplifying their lives. For any steady income they receive, like dividend checks, pension benefits, and social security checks, try to convince them to set up direct deposit, so the money gets to the bank.
If you notice that too many bills are coming in for them to handle, then try to get them to sign up for automatic payment through their bank for simple things like their utility bills.
The most important items that you should make sure your parents have is a will. More than 70 percent of adult Americans do not have any form of estate planning filed. This will definitely be a difficult conversation, but it is important to make key financial and medical decisions.
If you can afford it, you and your parents should go to an estate planner and have these documents drafted and updated regularly for major life events, like the death of a spouse.
I suggest that people create wills as early as possible. It will save a lot of trouble for your family after your loved one passes away. If your needs are very simple and you cannot afford an estate planner or attorney, there are numerous Web sites out there such as legalace.com or legalzoom.com that provide basic forms and instructions for you to create a will at a very low price compared with attorneys.
Additionally, your parents should have separate power of attorneys (POA) for your financial transactions and medical care.
A durable power of attorney is different from a power of attorney because unlike a regular POA, it stays in effect even after your parents lose mental capacity.
You can work with your estate planner on this or you can get forms from the same site you get your wills.