Talking to Your Parents About Their Money and Final Wishes

If you’re having a hard time talking to your parents about their final wishes, or making your own wishes clear, take heart. While it is difficult to discuss life’s final chapter, it may be easier than you think … and perhaps more rewarding. Today’s seniors will be handing down over $40 trillion!

Still, there’s that generation gap between boomers and their parents, right? True, there is a generation gap -- but it’s not what you expect! It’s not about lifestyles or even hair styles. Seniors are much more comfortable discussing estate planning than their boomer kids are!

That’s the key finding from a well-designed 2005 survey conducted for Hartford Insurance. If you think about it, apart from any dread you may be feeling at the prospect of dealing with your own parents, it makes sense. Chances are, the longer we live, the more experience we’ll have dealing with these issues and/or watching our friends deal with them. While it’s not the sort of thing where “practice makes perfect,” it’s bound to be less difficult once you’ve been through it.

So, if you’ve been avoiding this subject with your parents out of fear over how hard it will be for them, know that it’s likely to be harder on you! While dealing with these issues does seem to get easier as we get older, don’t put off talking to your parents now about their final wishes, and about yours. The more time you have to discuss these things --before someone is in a hospital bed and everyone is stressed to the max -- the better.

Afraid you’ll be seen as a money-grubber? Another important finding from the Hartford study is that 70-something year-old parents are more interested in helping their children and grandkids financially than boomers realize. They’re also more open to estate planning advice than their kids think they’ll be.

What Everyone Needs to Do

Before we get to specific tips for dealing with your folks, here’s what we all should do to make life easier on our heirs – and on ourselves:

1. Sign a will. While the mere thought makes some people think they’re about to die, without a property executed will, your parents’ worldly possessions – or your own -- could be tied up for months or years in “probate,” a costly process that could result in lawyers, courts, and the IRS getting more of the money than the family does.

Important: If the current value of your folks' assets is likely to be in the range of $2 million or more, they should consider signing various trusts, as well as a will, to avoid estate taxes. You can read up on estate taxes and trusts in this section of The AARP Crash Course in Estate Planning.

While most lawyers ought to be able to handle a simple will, you might want to ask around for a lawyer who specializes in elder law. Another good source: National Academy of Elder Law Attorneys. Once you have a few names, you can check their credentials here. Then call the attorney’s office, and ask how long s/he has been in practice and what percent of the office’s cases are devoted to estate planning. And, just like anyone else you’d consider hiring (right?), ask for references and check them!

2. Choose guardians for dependents. Is there anyone who is dependent on your parents? Who could best take over that responsibility? While we’re on the subject, who could best raise your dependents? Who would be best able to manage your kids’ assets? (They can be different people.) Once you’ve thought it through … and are sure you’re not being motivated by guilt … see if the people you’ve chosen are ready, willing, and able.

3. Pick people to make decisions when we can’t. Be sure these people are game, and be sure to tell them what you want (“what you really, really want”). Then sign these three documents:

• A durable power of attorney, which will allow the person you choose to pay the bills should you become incapacitated.
• A health care proxy, so a family member or friend of your choosing can make medical decisions if you can’t. They’re required to follow your wishes … if they know them.
• A living will (aka advance health care directive), to make your treatment wishes clear should you become gravely ill. Commonly thought of as a “do not resuscitate order,” a living will can also spell out someone’s wishes with regard to transfusions, tests, surgery, medication, and organ donation.

4. Choose beneficiaries for any money in bank accounts and retirement plans, which means that those funds will be "payable on death" to the people you name – and not a part of that bothersome and pricey probate process. Stocks and bonds can be handled the same way in most states. Avoiding probate is an excellent idea. Nolo Press offers excellent advice on how to do it.

5. Let loved ones know about key decisions. Most people think of this as involving preferred burial arrangements, which is surely important, but there are other issues to be considered as well, including everything from organ donation to the distribution of family heirlooms.

6. Learn more -- knowledge is power! Want more info before you talk to your folks? Inspired to do what you can to protect your own estate? There’s great advice online from Nolo Press and Mike Palermo, author of AARP’s Crash Course in Estate Planning.

What You Need Is a Good “Opener”

Wondering how to start the conversation with your parents? Virginia Morris, author of How to Care for Aging Parents, suggests that you use the example of a relative or family friend who didn’t plan well, and stress how you wouldn’t want the same mess to happen to one of them.

If that approach won’t fly, there are others to try:

• Got a control freak for a Mom or Dad? You can say, “I want to make sure to do things exactly the way you want them done.
• Or how about this for the more sentimental of parents? “You know how much I love and respect you two. I just want to make sure your wishes are carried out.”
• If it’s likely that you’ll be called upon as a caregiver or for financial support, you can say, “I really need to know more about where things stand with you, so I can help you explore the options.”
• Or punt, and broach the subject by telling your parents that you’re going to begin the estate planning process (if you haven’t, it would sure be a good idea), and want their advice.

Once you’ve started the conversation, it won’t take you long to get to the notion of putting down in writing how they want their wishes carried out … which will bring you to a discussion of the assorted legal documents everyone needs to sign. “It’s not just you, Mom. We all need to have wills.”

If you’re not successful at first, keep raising the subject in a low-key way, perhaps telling your parents about what you’ve found out from your estate planning research. Even if the conversation is going well, you don’t need to resolve everything at once (hopefully). If one of you has eyes that are glazing over, change the subject. “How about you mull things over, Dad, and we’ll talk about it again soon?”

After all of this, your parents may say that their financial affairs -- and estate plans -- are none of their kids’ business. At a minimum, try to find out where their various papers are located (e.g., their will, power of attorney, funeral plans, bank accounts, property deeds, insurance policies, car registrations, etc.) That alone will save you a lot of grief!

While keeping mum is certainly their prerogative, if you think they’d really rather their money go to your kids’ college than to Washington, speak up, or at least share a link to this article with them.

Preventing Family Feuds

Estates have been known to rip apart many family relationships. Even when family members have the best intentions, misunderstandings can arise at the drop of a hat. Here are some tips on how to prevent family feuds.

• Let your sibling(s) know about any discussions you plan to have with your parents. Ask if they’d like to participate in the discussion. Get their input – even if they can’t or don’t want to be directly involved. Is there anyone else they think you ought to include?
• If there’s been a falling out between family members, see if you can get everyone together. Impossible? Maybe they’d be willing to meet with a neutral third party -- be it a family elder, lawyer, financial planner, or even a therapist.
• If your folks’ choice of an executor might be surprising to some, get them to talk it out with the family members whose feelings might be hurt. Ditto if the person who has their power of attorney or health care proxy will be hard for some to swallow.
• Help any other beneficiaries understand what’s being done and why -- ahead of time. That way, they’ll see that the goal is to make sure there’s more to go around, not less.
• If you end up with your parents’ powers of attorney or are named as an executor or trustee, be sure to keep detailed records. You want to make sure everyone understands the whys and wherefores of your actions

Remember: This is likely to be easier on them than you! Get it over with, and it will be easier on you, later.

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* Nancy Castleman has spent the last twenty-two years teaching people how to save money, get out of debt, and live better on less. Her Good Advice Press site includes many free articles as well as information about her books and free e-letter.