By Jill Schlesinger
Tribune Media Services
"How can I talk to my parents about money? Every time I try to bring up the topic, my mother gets paranoid and the conversation deteriorates quickly." It is hard to balance being a responsible adult child, while not seeming like you are prying. Even if your loved ones appear to be financially self-sufficient, neurologists say that cognitive ability starts sliding as early as 60.
Having a conversation with your aging parents about their financial situation can be difficult because it often touches on feelings of control (or lack thereof), privacy and dignity. Indeed, talking to parents about money can be intimidating enough to cause many people to avoid it altogether, which ultimately leaves them with a tangled mess after death. That's why it's important to have "The Talk" when your parents are still healthy and self-sufficient.
When should you have the conversation? The easiest time is when your parents bring up something about money. Maybe it's a complaint about low CD rates, how the markets are doing or even a high utility bill. These are great opportunities to talk honestly about their current financial situation and explain that you can help by streamlining certain aspects of their financial lives, whether through automatic bill paying or consolidation of bank accounts.
The early conversation does not have to be a forensic accounting of every last nickel of your parents' finances, but you need to explain that an open dialogue will help them feel more in control and allow you to be prepared in case of an emergency. Remember, the goal is not to have your parents designate you as their power of attorney; it's to help them see that you are there to guide them today and assist in the future.
If your parent does not bring up the topic, talk about your own experience. Maybe you recently sent your children to college and had a money talk with them, or you hired a financial adviser, or consulted with an attorney to create your own will. A colleague of mine raised the topic after the death of friend's father: "Jen's dad left such a mess that she can't even mourn him properly because she is overwhelmed by paperwork!" Her parents opened up more when they realized that withholding information could exacerbate an already difficult time.
What information should you gather? Make sure that your parents have current estate documents in an accessible location. If the will has not been updated in many years, encourage them to schedule an appointment with an estate attorney. Drafting or updating estate documents will force your parents to track down bank and investment account statements, insurance policies and pension documents. You can offer to attend the meeting, but only if they want you there. Emphasize that this is an opportunity for them to make their own decisions and to make their wishes known. One important note: Your parents may choose to do something that you don't like! Unless it is dangerous to their well-being, try not to argue for a different outcome.
If your parents have an up-to-date will, encourage them to draft a detailed list of where various accounts and important documents are held so that, in the event of an emergency, you are not rummaging through their home to locate everything. This is an ideal opportunity to ask your parents the names of and contact numbers for brokers, advisers or CPAs. You should also remind them how financial salespeople can be very convincing. Tell them to talk to you before buying any financial products or opening any new accounts, or offer to receive duplicate statements sent to your address to make sure your parents are buying suitable investments.
Keep notes of these conversations, especially if you have siblings. There are far too many stories about relatives who become estranged as a result of end of life financial decisions. Finally, you can only do what you can do. If your parents simply shut down or refuse to talk to you about their money, don't fight it. They may not want to talk today, but at least they know that the door is open.
Jill Schlesinger, CFP, is the Emmy-nominated, Senior Business Analyst for CBS News. A former options trader and CIO of an investment advisory firm, Jill covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money."
This was printed in the June 30, 2013 - July 13, 2013 Edition