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.
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.
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.
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.
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.
Do they 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.
The Bottom Line
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!