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Would you rather talk politics or money with your family? While there’s certainly a case to be made for leaving political banter out of the family dinner discussion, avoiding money talk can have major unintended effects, especially as parents get older and the likelihood increases for health-related events.
Max Barger, senior wealth strategist at PNC Wealth Management®, says it’s critical for families to understand aging parents’ financial and other wishes, to know where to locate important documents, and to discuss family members’ roles in making key decisions. He explains that many families regret that they didn’t put the awkwardness aside and have the discussion sooner.
“It often takes a major life event for people to realize they should have had the conversation earlier,” he says. “Dad has a heart attack, mom’s sister passes away; or worse, the parent who controlled the finances dies unexpectedly, and the spouse who wasn’t as involved is left scrambling to piece things together.”
Discussing financial wishes and logistics before an emergency allows the conversation to be more effective, without emotional distress or missing information.
Finding the right time and place for such an important conversation can seem overwhelming, but you can remove some of the pressure if you view it as a phased approach. The first step is just to mention your interest in the topic. Barger suggests using a parent’s retirement as a pivotal moment to start the discussion.
“An upcoming retirement is a great time for an adult child to broach the subject of finances with a parent because the parent is starting a new chapter of life and is likely more open to help in figuring out this big change,” he says. “You can start the talk by asking about their goals in retirement.”
If the parent already is well into retirement, use a friend’s life event to spur the conversation or share a news article or other relevant resource. Whatever path you choose to start the conversation, the key is to be direct and transparent.
“There is a fine line between expressing desire to help and coming across as inappropriate,” says Barger. “Explain that you simply want to make sure they have everything in place, and that you’re there to help.”
As you get further down the path and feel that both parents are ready for a more formal discussion, it’s important to include all siblings to make sure everyone is involved and aligned. Barger also suggests taking the meeting offsite.
“It’s helpful to get the family away from the house and the kitchen table where so many of those serious discussions tend to happen and where people tend to fall into their long-held roles,” he says. “A new environment provides a fresh atmosphere that encourages everyone to stretch out of their comfort zone and speak up with their concerns and desires.”
There’s a host of things you could address in this family discussion, but a few of the most important questions to ask are:
Answers to all of these questions can be addressed more formally in these five key planning documents:
Learn more about each of these Key Planning Documents. A financial advisor can help you determine what is best for your unique needs, then an estate planning attorney can provide legal advice and draft the most appropriate documents for you.
While it can be awkward to talk about money with your parents, getting over that initial hurdle is the hardest part.
“It’s a difficult conversation for everyone involved, but it can turn out to be a valuable and appreciated discussion if the child approaches it humbly and with respect,” Barger says.
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Even families with very open lines of communication often stumble when the conversation turns to finances and planning. The key is to understand what you need to know, plan what questions you’ll ask, and find out where your parents’ have concern.
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