As an adult daughter or son, would you rather talk to your aging parents about sex or about their money, their finances? Yup, I know. Neither.
What is the difference between the two? You don’t really have to have a conversation with your parents about sex. Talking about their money situation, about their finances, and financial plans for the future is, in contrast, essential. The bottom line is that families can save time, money, headaches, and heartaches down the road by having ‘the talk’.
When should you start the conversation about finances with your parents?
NOW. Ideally, the best time is when your parents are relatively healthy and young. So, that probably means now. THE biggest mistake made on everyone’s part is thinking that there is time.
Trust me. I have witnessed too many families struggle through the impact of not preparing for the future when it comes to finances. The primary reason why adult daughters and sons don’t bring up the money conversation is fear. Money may be a taboo topic in the family. You may not want to think about, let alone talk about, subjects that broach on your parents’ aging, declining health and death. It may feel too much like a role reversal. And for some daughters and sons, there is a fear that the motive for bringing up the subject of money will be questioned (read, soooo you just want to know how much money you are going to inherit, don’t you?)
Things to consider as you prepare for ‘the talk’
- How open is your relationship with your parents?
- Do your parents trust you regarding money and financial matters?
- How much of a taboo has ‘money talk’ been in your family?
Here are 7 practical examples of how to broach the money conversation
- Acknowledge the awkwardness upfront.
Example: “Wow, I am really uncomfortable bringing this up, but I think it’s too important to avoid talking about it.”
- Clearly state what your intention is and what it is not
Example: “I want to be prepared to help you as best I can if needed when you get older. I also want to know what expectations you have of me, both in terms of finances and your health care. I want to be clear with you that this is NOT about me poking around to find out about my (possible) inheritance. I am always not trying to take over your finances or in any way take away your independence. I just want to be sure we are all prepared for the future.”
- Speak from your own experience.
Avoid “you need to” or “you should” statements because they are controlling and just invite resistance. This means using “I” statements around your feelings and why you are bringing up the subject.
- Provide some context for why you are raising the issue NOW.
Example 1: “I have been thinking about the future and trying to plan regarding my finances. This led me to thinking about your financial situation. Can we talk about this because I may need to help or be involved with your finances at some point in the future?
Example 2: “I have been thinking a lot about what happened with Aunt Jennie and all the fighting between her kids and I want to be sure we all avoid this situation in the future.
Example 3: “I recently read/heard about this horrible scenario where a parent needed help paying bills and the kids couldn’t help because they didn’t know anything/didn’t have access to bank accounts or bills to help out. They assumed that they could access but they couldn’t because no prior legal documents had been set up when the parent was mentally capable to do so.
Example 4: “I am working on my retirement plan. I am going to complete my power of attorney for property and my will and just wonder if you have any advice you can share about this.
Example 5: “I recently met with a financial advisor and they have urged me to create a power of attorney and will. This financial advisor gave me some ‘what if’ scenarios that really spurred me into action. That got me to wondering whether you have thought about these ‘what if’ scenarios and what you would like to have happen.” (‘what ifs’ are everything from car accident, fall, stroke or heart attack to diagnosis of dementia).
- Involve your siblings at the front end if possible.
Anyone who has a brother or sister knows that virtually anything related to parents can stir up jealousy, rivalry, old hurts, and questions of how loved you are by your parents relative to your sibs! Add money matters to this and the list can now include suspiciousness and out and out conflict.
IT is entirely possible to bypass this negativity and create a cooperative venture with your siblings by discussing your concerns with them before speaking to your parents.
- Choose your timing well for this conversation.
Families often try to piggyback this conversation when they are gathered for family events and holidays. IF you do this, try and schedule it after the event itself. It is also important to pick the best time of day for all (starting with your parents!)
- Consider this the first of (hopefully) many conversations.
This is rarely a ‘one time only’ conversation, even when it is an open and trusting relationship and you can be direct. When this trust and openness needs to be built, it may be best to be more general and indirect and be prepared to ease your way into a full-fledged conversation. Patience and respect for your parents and the time they need to process the subject, is key.
What financial information do I need to have?
What is most important is the question of whether your parents have created a legally binding power of attorney for property/finances. Your hands are essentially tied if they don’t have one and the remedy usually involves going to court, with all the attendant court costs.
The financial journalist, Cameron Huddleston, provides a thorough dive into other specific financial information you need to best help your parents in the future.
Speaking of finances, our friends at RBC Ventures are testing a new online tool that helps family members coordinate tasks and track expenses associated with caregiving – through a chat interface. We’re looking for families to test this solution for 4 weeks and provide feedback. If selected, each participating family member be reimbursed $200 for your participation! If you’re interested to be the first to test this out, please answer a few questions in this survey (it only takes about 5 minutes). Thank you for your time!
So, how did that conversation about finances go? Getting started is the hardest part, but once you do, you have paved a smoother road ahead. We would love to hear about your experiences with this tough conversation.