It's the conversation that many families put off. And then put off some more.
It's the talk between elderly parents and their adult children about the parents' finances. It's a conversation that every family eventually must have — and it's best to do it before a crisis hits.
"Money is a taboo subject for families, but we do find that silence can be costly," said Lauren Brouhard, a senior vice president at Fidelity Investments.
The company recently released a study that found that when it comes to important but difficult conversations about finances, many families struggle with the timing.
The Intra-Family Generational Finance study showed that 64 percent of parents and their adult children differ as to when detailed conversations on key financial topics, including retirement preparedness, elder care and estate planning, should take place.
"While parents would prefer to wait until after retirement, their children want the conversations to take place well before their parents retire or experience health issues," Brouhard said.
"The study found that the top reason cited by parents for not discussing their retirement plans or other matters with their adult children is that they don't want them to count too much on their future inheritance."
While I understand where parents are coming from, their reluctance is risky. Sooner or later, they will have to have that talk, and it most likely will occur during a crisis.
"It is a difference between destiny and certainty," said Michael B. Cohen, an elder law attorney in Dallas. "A failure of the family to communicate will lead to mere destiny, whereas if there is a family discussion, then a plan can be discussed for certainty. If nothing else, there will be a better understanding of what is truly important to the parent and what risks they are willing to take, if any."
So the best time to have that talk is now.
Adult children can broach the subject by using another person's situation. Perhaps a friend recently had the discussion with his or her parents. You can use that as a bridge to ask your parents whether they have the proper estate planning and medical documents prepared, and whether they have spelled out their desires.
You need to know this so you can carry out their wishes.
On the flip side, parents can also initiate the talk. Knowing that they've communicated their wishes to their family can keep them from fretting.
"One of people's big fears as they age is being a burden on others," Brouhard said. "Taking the time to have more detailed conversations can really dramatically increase peace of mind and reduce anxiety for many families."
"Short of having these discussions, there could be surprises about a parent's wishes, what responsibilities a parent may be assuming a child may or may not be willing to take on — important matters that really impact everyone's life in the family," Brouhard said.
For example, the Fidelity study found a wide gap in expectations about who will care for a parent if they become ill. Of adult children surveyed, 43 percent expect they or a sibling will need to handle caregiving duties. Only 6 percent of parents expect this.
As an adult child, it's important to remember that decisions about their finances are up to your parents, as long as they are capable.
"When it comes to finances, it's not a democracy," Brouhard said. "While different family members should have a role in the planning process, ultimately, it's going to be up to the parents to make the important decisions that they have a right to make about their future, as well as how they disperse their assets and who's in charge of what."
ABOUT THE WRITER
Pamela Yip is a personal finance columnist for the Dallas Morning News. Readers may send her email at firstname.lastname@example.org; she cannot make individual replies.
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