Talking to your parents about their financial affairs can be emotionally challenging for both you and them. But for your peace of mind, and possibly your financial security, it is a process that needs to happen sooner rather than later. I say process rather than event because it often takes several discussions over a period of time for you to gain an understanding of their financial resources and requirements and to come to a mutual agreement about what needs to be done to provide for their well-being. It's all about you gaining their trust to help them make the best decisions.

For most parents and children this process often marks a transition in roles. In the past, your parents probably provided a lot of financial advice, from what to do with your childhood allowance to what type of appliances to buy for your first home. Now, you may be the one providing advice on what to do with their money.

If your parents are currently doing a good job taking care of themselves, you might ask why should you even attempt to start what could be a potentially confrontational discussion? To put it simply, their financial security, or lack thereof, could affect your financial security. You don't want to wait until you are about to retire to find out that your parents are about to run

out of money, or have no plans for dealing with serious health issues that may require someone to care for them.

I suggest you start this discussion process slowly and don't expect it to be efficient at first. You need to gain their trust by convincing them that you are concerned about their long-term well-being and providing the best care possible with the resources they have. Children who know they are named as personal representatives of their parents' estates can justify such discussions on the grounds of making sure they understand, in advance, what will happen when their parents pass. Start with "big picture" questions such as the following:

1. Do you have enough income to cover your expenses? Does your income include withdrawals from investments, and if so, how long will the investments last?

2. Have you thought about what you would want to do if you need assisted living care? Are any of your friends receiving assisted living care?

3. Have you thought about what you would want to do if mom/dad dies?

4. Do you have a current will that tells how your estate will be divided? Are there any changes that you want to make?

Once you get them talking, you can go back and ask for more specific information such as the sources of their income and investment details. During your discussions, you'll soon get an idea of how organized your parents' financial records are. Offering to help them organize their records not only provides a valuable service but helps you gain a better understanding of their financial position and obligations.

Although this article was written with the idea of adult children dealing with aging parents, it could also be viewed from the parents' perspective. If you are already retired and have adult children, ask yourself if your children know enough about your financial situation to provide help if you need it. Do they know that you have the financial resources to provide more than enough income for the rest of your life, or not? Do they know that you do or don't have long-term care insurance that will provide financial support if you need assisted living care? Do they know what you would like them to do (or not do) with any money, property, and belongings they will inherit? If not, I encourage you to take the initiative and share that information with them. It's a responsible and caring thing to do.

Bill Waggoner is a Certified Financial Planner professional and is a vice president and financial consultant for D.A. Davidson & Co.