For most families, money isamong the toughest subjects tobroach. Some parents still viewtheir adult children as kids andcan't imagine having a weighty discussionabout money matters with them. If yourparents, like most parents, fit into the difficult-to-talk-to category, you will have toemploy some high-level diplomacy.
To broach the subject, look for cuesthat your parents drop. For example,when you're talking to them they mightmake references to "when I'm gone" orthe financial condition of friends, particularlythose who have recently gonethrough a change in health or lost aspouse. Squelch your instinct to reassureyour parents that they'll live forever.Instead, use their opening gambit to starta meaningful conversation about money.
If your parents aren't dropping cues,find a reason to begin talking aboutmoney issues. Mention a relevant articlefrom a newspaper or magazine, or a topicyou recently discussed with a friend. Forstarters, you could discuss the importanceof having a will and long-term care (LTC)insurance. Offer a rationale for the conversation,such as "Everything is going sofast these days, we should start planningfor the future as a family."
One way you can get involved is byoffering to be your parent's financial secretary.You can handle their correspondence,phone calls, paperwork, andinvestment details. As you take on newresponsibilities for your parents, alwaysdouble-check their comfort level. Our parents, like most people,weren't raised to talk about money.
Handle with Care
When you're talking about money,stress to your parents that you're notinterested in taking over their bankaccounts or their lives and that no decisionwill ever be made without them.Remember how it felt when you were akid and your parents decided your futurewithout asking you first? Try your hardestnot to make them feel this way.
If the initial conversation becomesuncomfortable, postpone further discussionuntil another time. You might trybringing in a trusted family advisor toback you up. Sometimes the presence ofan outsider can be helpful. Of course,when you ask questions, be prepared foranswers that may or may not be whatyou want to hear. For example, be readyfor an honest discussion about whowould make the best executor.
Despite discomfort, remain patientand steadfast. Your comfort level willeventually rise once you know how yourparents want important decisions handledand where they keep importantpapers. Your parents, meanwhile, will bereassured that you're not taking over thehelm of their finances, but merely helpingthem gain further financial security.
While you might feel uncomfortableat first, if you ask the right questions theright way, talking about money withyour parents becomes a win-win situation.Following is a list of the right questionsto ask your parents and the rightway to ask them:
1. Are your insurance needs beingmet? Once your parents have no onedepending on them for income and nomortgage or other large debts to pay off,they may no longer need life insurance.They will never hear this from a life insuranceagent. In fact, there is a segment ofthe life insurance industry that preys onsenior citizens. Your parents may be betteroff using their disposable cash to buyLTC insurance. Sit down with your parentsand a trusted insurance advisor toreview their insurance needs.
2. Do you have wills and when did youlast review them? Remind your parentsthat a will is the only way for them tomake sure their assets are handledaccording to their wishes. Encourageyour parents to make an appointmentwith an estate-planning attorney to havea will drawn up or revised—wills shouldbe reviewed every 5 years. Ask if theywould like you to come with them, butrespect their wishes if the answer is "no."
3. Do you have a durable power ofattorney? A durable power of attorney isvalid once your parents are incapacitated.If your parents are reluctant to give youpower of attorney, have their lawyer holdthe power of attorney until it's needed. Ifyour parents don't have an estate-planningattorney, call your local bar associationfor a referral.
4. What kind of health insurance willyou need if you become incapacitated?Your parents may prefer receiving homehealth care, moving in with family members,or living in a nursing center.Knowing your parent's wishes will makethings easier for everyone should the needfor ongoing care arise. If your parentsprefer a continuing care center, help themresearch different centers now until theyfind one or two they like.
5. Where do you keep your importantpapers and documents? Emphasize thatyou aren't interested in how much moneyyour parents have—you just want tomake sure nothing gets overlooked if theydevelop a sudden illness and can't handletheir finances. You'll have to knowenough beforehand to make sure allexpenses are paid (eg, mortgage, loans,bills, and charitable contributions) and allincome is received (dividends, interest,and pension and Social Security checks).Finding a parent's will, insurance policy,and checkbook can be a big problem ifyou're not prepared.
6. What investments have you made?After you understand what investmentsyour parents currently own, evaluatethose investments to make sure that theymatch the investment objectives of mostpeople their age. Don't offer investmentadvice unless you're knowledgeableand comfortable with the various choicesavailable.
7. How much money do you have insavings, investments, and retirementaccounts? Again, emphasize that youaren't interested in how much moneyyour parents have. Be honest and let themknow that you need to gauge whetherthey'll be able to support themselves ifthey should live to age 100. Make sureyou also find out how much money yourparents will receive each month frompensions and Social Security.
Adapted from Don't Mess with My Money by Kenand Daria Dolan, copyright 2003. Reprinted withpermission from Currency/Doubleday Books.
Ken and Daria Dolan are thehosts of The Dolans, the nation'snumber 1-rated personalfinance show, which originatesfrom WOR-AM in New York.For 4 years, they served asmoney editors on CBS ThisMorning and CBS News Saturday Morning. Theyalso previously hosted their own popular personalfinance show on CNBC and have appeared on manyother television shows, including The Today Show.