According to a generational finance study, you’re probably about as eager as your parents to discuss finances – which is to say, not very eager at all. But addressing the topic can benefit your entire family by clarifying your parents’ wishes and enabling you to help establish a joint plan for carrying those wishes to fruition. And the sooner the better – communicating and planning now can alleviate the problems and confusion that arise if you wait until your parents are incapacitated, suffer diminished mental faculties, or pass away.
Before initiating the conversation, plan your approach to enhance mutual trust and understanding. Tailor the discussion to your parents’ personalities and viewpoints. Position yourself as helper rather than custodian, and ensure that your parents maintain a sense of control. Emphasize that you want to fulfill your parents’ wishes to their satisfaction and help them maintain independence as long as possible.
Involving other supportive family members may also help ease the stress. If your parents have a trusted advisor, such as a family attorney, explore the option of including that person as part of the process. Notify anyone who will be part of the conversation in advance.
The scope of your discussion will depend on your existing knowledge and your family dynamics. If the issues are complex or weighty, consider splitting your talk into multiple sessions.
Here’s a framework for starting the dialogue.
Do your parents have a will and an estate plan? Have they executed a trust, a durable power of attorney for finances, or an advance healthcare directive? Will they allow you to review the documents and/or speak with their attorney?
What medical insurance policies are in place? Do your parents have long-term care insurance? Who is their personal physician and what significant medical issues exist?
Income, expenses, and debt
What are the sources and amounts of your parents’ income and expenses? To whom do your parents owe money, and how much do they owe?
Where do your parents keep tax returns, bank and brokerage statements, and similar records? Who are their tax preparers, financial advisors, and/or stockbrokers? Will your parents allow you current access to those records and advisors?
Discussing finances with your parents can be a daunting prospect. Give us a call if you’d like us to be part of the conversation. We’re here to help.