Conversations surrounding finances between adult children and their aging parents/loved ones are often considered “taboo” and make people feel very uncomfortable. Unfortunately, not having an honest discussion can create a host of problems. Misunderstandings and bad feelings between family members can arise, the older adult(s) future wishes can be overlooked, and even financial mistakes can occur.
Preparation and openness are key to having a productive discussion between family members about finances. In order to create a more positive experience for all involved, start by laying the groundwork. Understand why it’s important to have a plan and what topics should be discussed.
Benefits of Creating a Plan
- Helps you prepare for emergencies, and not leave the future to chance
- Avoids miscommunication and ensures wishes are respected and carried out
- Defines roles for parent(s) and adult children
Topics to Discuss
- Comprehensive plan for now and into the future
- Overall financial picture (current, projected, outstanding debts, assets)
- Future housing and care preferences
- Important documents and contacts: HCP, POA, will, long-term care life insurance policy (do they exist? where are they located?)
The Roadmap to Create a Productive Conversation
Some families just delve right into a conversation about finances. However, part of the pre-planning process that leads to a productive, less stressful conversation about finances starts with simply understanding each other’s viewpoint.
Understand Each Other’s Viewpoint
- Aging, health and money are sensitive topics
- Want to maintain control and dignity
- Concerns: fear of change, loss of independence, decline in health, legacy, death
- May feel sense of relief, empowerment once plan created
- May want a quick solution; may not have the patience for a long discussion
- Often don’t want to “take over”; need to be asked if they want to take on responsibility
Create a Positive Atmosphere
Now that you’ve thought about each other’s basic feelings, fears and strongly held opinions, adult children and parents need to follow a basic set of conversation rules to create a positive atmosphere for all participants. Also decide where the conversation should take place. The best location will be one that eliminates distractions. Some families prefer to meet in a neutral setting, rather than someone’s home.
- Understand that finances are very personal
- Remain calm and keep emotions in check
- Be clear and transparent (no hidden agendas on either side)
- Allow plenty of time for discussion
- If in a group, create an agenda
- Limit attendees for initial meeting to siblings, adult children, trusted family member (exclude spouses for this round)
- Listen, really listen to each other (may be helpful for listeners to take notes)
- Problem-solve together
- Avoid falling into old family roles (if someone gets defensive, change topic of conversation or shelve for another time)
- Emphasize that the plan can be changed/adjusted over time
- Speak adult to adult (don’t instruct your children)
- Ask for your childrens’ opinions and respect their answers
- Ask if they are willing to help (don’t assume)
- If they cannot help with certain things, brainstorm solutions together
- Start from place of respect with reverence for parent(s)
- Reiterate that your parent(s) are in control; they are driving the process
- Refrain from judging; be tactful and sensitive with wording
- Enlist input of other siblings/trusted family members before conversation; assign tasks/roles when appropriate
- Talk WITH parents, not AT them
- Remember: preferences expressed are your parent(s), not yours
- Offer support/help (take tasks off their plate)
- Reassure that you are here to make sure their plan/wishes is/are followed, and plan can be changed
- Ask informational questions; look for “clues” in their answers
- Take notes to be shared with participants to ensure that everyone involved is on same page
Sometimes the parent initiates a discussion around finances, and sometimes adult children are the ones who take the first steps. Some families find it helpful to include a trusted professional in the initial conversation or at some point in the planning process. This can be a long-time family financial planner or family lawyer, an elder law attorney or an eldercare consultant. Some adult children find it helpful to share a real-life story, such as a friend’s similar experience handling helping with finances or navigating a crisis/life event with their parent.
These conversation starters help to set the stage for a productive initial meeting. It’s important that the primary focus be on creating a financial plan that will cover the parent’s retirement needs into the future, not on inheritance.
Conversation initiated by parent(s):
- Do you have any advice for me about retirement planning?
- What are your main concerns for me?
- How do you see your role in the planning process?
- As I get older, we’ll need a plan for handling day-to-day finances, such as paying bills. Are you willing to help with that?
Conversation initiated by adult child:
- I want to reinforce that you are in control, driving this process, and your wishes will be followed.
- To be honest, I’m concerned about you. I want to make sure we have this covered.
- Just like you guided me/us through new phases in life, I/we’d like to be part of process now to provide assistance to you.
- Do you have your important documents set up? Where are they located? Do you have a designated authorized party on your accounts? Passwords?
- Do you know what will your financial picture will look like in the future?
- What are your long-range plans? What are your plans for the next few years?
- Do you plan to downsize?
- If you need care or a supportive living situation in the future, how do you want that handled?(Discuss “what if” scenarios, i.e. “In an emergency what would you like me/us to do?”)
- Do you need help with tasks, such as setting up landscaping, shopping, online banking, fraud alerts, tax preparation?
Setting up a positive initial conversation is the first step. This lays the groundwork for additional conversations and follow-up in depth planning to attend to all of the details you discuss.
Keep in mind that you don’t have to make immediate decisions on everything you discuss. Hopefully you have started this process early so that you and your family are not in crisis when the initial conversation takes place.
Very often seniors and their adult children get professionals involved to provide assistance, such as a financial planner or elder law lawyer. You can do the same.