Discussing money with your parents can be a hard topic to approach. Depending on the family dynamic, it may or may not be a subject that was ever breached growing up. Money has and continues to be a taboo subject even between family members. Despite this, it’s more important than ever to have money conversations with your parents. Many millennials parents are approaching or now in the retirement stage of their lives and hopefully, they’ve done a good job planning for the financial aspect of these changes. The reality is though, that families have a vested interest in having conversations together to avoid future complications should anything unexpected arise in our parent’s finances or health. This article will explore 5 important money questions to ask your parents, and how doing so, can help improve the family dynamic not only financially, but from a relationship standpoint as well. 

Financial Questions to Ask Your Parents

What financial questions should you ask your parents? Below are some of the most important.

Questions 1: Do you have a will and estate plan?

One of the most important questions to ask your parents starts with simple estate planning. Having an updated will and estate plan in place ensures your parent’s wishes will be carried out.

Without a will, your parent’s asset divisions would be decided upon in court, which as you can imagine can lead to nasty intrafamily arguments that take place in a public proceeding. In order to avoid any arguments or confusion, this can be avoided by ensuring your parents have a plan in place upon their passing.

From the parents point of view, this ensures their money is used for THEIR desired purpose. Leaving a legacy that they define is important. And from the kid’s point of view, ensuring they carry out that legacy and/or aren’t blindsided by any inheritance or plans for their parents’ money.

Approaching parents with this question also helps ease into other financial questions and hopefully helps them understand why it can be important to include their kids in these conversations or at the very minimum, providing them with the information.

Specific Questions to Ask Regarding an Estate Plan

What has or has not been established?

The first step is to ask what has already been created or established in terms of an estate plan. Understanding what wills, trusts, or other estate planning documents will allow you to know what is going on or, even more importantly, what is needed. Generally, your parents may have a will in place along with the power of attorney documents. The Will, will serve as a guiding post for how the estate will be settled, and the power of attorney forms will outline who is responsible for financial or medical decisions in the event of incapacity. Of course, it is also possible that your parents might have a trust(s) established along with other documents outlining their healthcare directives and so forth. These are all important documents to have in place. Also, this will allow you to push your parents to get started on creating those documents if none are established. Remember that having adequate documentation in place now will only help you in the future when that unfortunate time comes. 

Where are the documents held, and who is the attorney?

Now that you’ve established what documents are or are not in place, it’s time to find out where they are and who created them. Estate documentation should be held in at least two safe places. Common places like the attorney’s office and a safety deposit box are common. However, most families keep those documents within their home(s) or amongst other family members. Ensuring that you know where the documents are is key, as you do not want to worry about the location of said documents when there is a crisis in your family. 

Then, knowing who created the documents might help you find them for one, but it is likely that these documents will need to be updated at least a handful of times throughout your parents’ lifetime. As laws change and you and your siblings grow up and have families of your own, there will likely need to be updates to account for all of lifes changes. 

For example, the SECURE ACT of 2019 drastically changed the rules on how retirement accounts are paid out to beneficiaries and some estate plans required changes to account for those new laws. Knowing who the attorney is will help facilitate those changes and provide you with the person who created such documents in the event a question arises. 

What is the ultimate goal of your estate plan?

Asking your parents about their ultimate goals and wishes may be difficult, especially if you do not agree with what is presented. Yes, it can be difficult, but remember that it is their assets and decision at the end of the day. Your goal should be to understand what will likely come in the future. Although your parents’ wishes will be spelled out in the estate documents, hearing it from them will provide the context needed to review the estate documents more accurately and help you understand what is in front of you. It can also provide insight into the estate plan to ensure your parent’s wishes are accurately spelled out on the documentation. 

Keep in mind that not only do estate documents spell out how assets will be distributed but they also are used to facilitate healthcare directives (decisions of life support and other matters) and final wishes. So, it is often advised to discuss this with your parents so any decisions do not blindside you during a moment of crisis. No matter the result of this question, a basic understanding of your parent’s wishes will help you understand and possibly facilitate their estate. 

What is required of me and others?

Most likely, your parents will include you in their estate. Not only as beneficiaries but possibly as a facilitator of their estate or with the power to make decisions. A proper estate plan can be made up in many ways, but you will likely be included as an executor of the estate, a trustee of a trust, and/or the healthcare or financial power of attorney for either or all of your parents. Each one of those listed items have different responsibilities that you will need to understand. 

For example, if your father had you as their medical power of attorney, meaning you can make medical care decisions for your father, it would be better to know about it now rather than in the moment. This can give you time to prepare, but better yet, time to react to any life-threatening situation. Even if you are not the one selected for these tasks, knowing who it is will aid you and your loved one in their time of need, and it is perhaps the most important question to be asking. 

Of course, many more questions should be asked when reviewing your parents’ estate plan. However, these simple questions can help open the door to that conversation that not everyone is prepared for. From my experience, I know that people do not like facing their mortality. Still, I can assure you that even a basic understanding of the needs and structure of their estate plan will pay dividends in the future during a very emotional time.

Question 2: Will you need financial assistance in retirement?

This is an obvious question to ask parents since they’ll likely look towards help from kids at the point in time they may need assistance. However, knowing ahead of time whether parents will need financial assistance can help you prepare earlier rather than later. The same goes for parents who are uneasy about their retirement situations, they’ll likely feel much better knowing that their kids are ready and able to provide assistance if necessary.

That financial assistance could come in several ways, whether it’s providing living space, paying for monthly bills, or helping with healthcare expenses. Regardless, it’s always better to have a plan in place beforehand, rather than having the topic approached when the situation may be dire.

Question 3: Where do you keep your important documents?

Along the lines of discussing a will and estate plan, ensuring parents share where you can find their important documents is key. Documents such as their will, powers of attorney, social security card, etc are all important should the need arise. One idea would be to make copies of the documents and to provide them to family members whom they may impact. Therefore, should the need arise to enact or use any of the documents, there isn’t any confusion or hassle in trying to locate them.

Question 4: Do you have long-term care insurance?

Long-term care insurance helps pay healthcare expenses generally not covered by health insurance, Medicare, or Medicaid. Costs for these types of medical expenses have sky-rocketed in recent years. Services that long-term care insurance help pay for include nursing homes, assisted living facilities, adult day care, and home health care. It’s estimated that roughly half of 65-year-olds today will eventually require some type of long-term care services according to a study in 2016 by the Urban Institute and the U.S. Department of Health and Human Services. The average national costs of nursing care is 93k…

As you can imagine, long-term care services can be extremely expensive if paid out of pocket and can quickly diminish retirement assets. Therefore, if necessary, an insurance policy can potentially help reduce the impact of these costs. Having this discussion with parents is important as the possibility of paying for these services could eventually fall upon the children if not planned for.

Question 5: Do you have a trusted financial advisor?

If your parents have a financial planner or advisor they’ve worked with for years, they’ll likely have good insight into all of these important questions and a plan surrounding them. Ask your parents if you can be included in a meeting with their advisor. This would be a great place to broach these questions, understand their plan, and help you understand anything you may need to plan for financially.

Don’t Be Afraid to Ask Your Parents Financial Questions

In my opinion, it can’t hurt to have these conversations and questions with parents if approached in a way that mutually benefits everyone. It’s always better for the family to be in the know than in the dark around these matters.

Opening up these lines of communication can also help build more trust and understanding between one another, helping reinforce family relationships. It is important, however, to ensure that no one is judged, criticized, or attacked in these conversations and that it’s used as a constructive way to move the family closer and towards a common goal!