How to Talk About Money with Your Family

How do you get your aging parents to discuss financial issues with you? Confirm that they have essential documents up to date and stored where you can find them? Ensure that you know how to reach their insurance agent, attorney, CPA and other financial specialists? And that you are clear on the healthcare decisions they want made on their behalf?

It’s not your typical after-dinner conversation—and, in most cases, casual conversations about these topics rarely produce the level of information that is needed. Families differ greatly in their personalities and dynamics, in the complexity of their financial situations and, most important, in the willingness of the older generation to relinquish control over what many consider to be the very essence of their independence.

While some families are comfortable with financial decision-making across generations, others find it important to involve an objective financial planner in the preparations.

Ideally, this is a discussion that takes place long before your parents fear the loss of independence or show signs of age-related dementia. One possibility is to make a point of sitting down with your parents on a regular basis and sharing with them what you are doing in various facets of your own financial plan.

It can be especially helpful to share a checklist of key financial documents you have in place, paving the way for questions about their equivalent set of documents.

When your parents see you putting plans in place for your own children or other beneficiaries, they may be more comfortable with the conversation and more willing to take the steps they see you taking. The setting becomes one of thoughtful advance planning rather than one that is forced upon the family during an emotionally charged time when signs of senility are increasingly evident.

A Checklist of Key Documents
Following are key documents to have in place for yourself—and to encourage your parents to have:

  • Last Will & Testament – Distributes assets to your beneficiaries; subject to probate.
  • Living Trust – Transfers assets to your beneficiaries; not subject to probate.
  • Durable Power of Attorney – Lets you appoint a representative or family member to make financial or legal decisions on your behalf (does not cover healthcare decisions). A power of attorney can be effective immediately, structured to be effective only in specific circumstances, or with almost any other broad or limiting factor that fits your situation.
  • Advance Medical Directives:
    • Living Will – Lets you provide instructions for your family and medical personnel to follow in the event you become terminally ill or unable to communicate on your own.
    • Healthcare Power of Attorney – Lets you appoint a representative or family member to make healthcare decisions on your behalf if you are not able to make these decisions for yourself.
    • HIPAA Release to Authorized Persons – Lets you designate persons you wish to have access to your personal medical history and records. Without such a release medical professionals may be barred from discussing your medical condition with friends or loved ones if you are unable to communicate your wishes.

Where, Oh Where?
As you discuss these various documents with your parents, it’s a good idea to create a central location to store them along with other key financial information such as:

  • Bank statements, credit card statements and loan documents
  • Investment/brokerage statements
  • List of stocks held personally
  • Insurance policies
  • Social Security records
  • Property deeds
  • Information on retirement accounts
  • Tax returns and other tax-related documents
  • Contact information for attorney, accountant, financial advisor, physicians, minister

Note that most banks, including BB&T, will securely store original documents such as wills and trusts free of charge for clients who name the institution as their executor or trustee.

Preparing the Next Generation
If your children are older teenagers or adults, it’s important to have the same conversation with them, so they know how to contact your financial advisor and other key professionals, and how to locate your important financial documents in case of an emergency. As appropriate over the years, provide details that will equip them to approach their own financial planning effectively and ultimately be prepared to assist or take over for you.

Making It Work for Your Family
While some families are comfortable with financial decision-making across generations, others find it important to involve an objective financial planner in the preparations. The key is choosing someone your parents are comfortable with, and putting the plans in place while they can be active participants.

In fact, for some families this can become a very positive experience as you set aside time—perhaps once a year—to talk through what you want for each other in the future in a thoughtful and loving way. Whether the process is smooth or bumpy, or some of both, there’s no substitute for the peace of mind it provides everyone once it’s done.

Ready to Take Action?
The most effective approach to financial planning is one that integrates all components—investments, insurance, savings for education, savings for retirement, credit needs, charitable giving, tax planning and estate planning—into a unified, coordinated strategy customized to your needs, priorities and preferences.

Email an advisor or call us at 800-228-9798.

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