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How to have a drama-free discussion with your family about money

Jeanie Ahn
Senior Producer/Reporter

Bringing up the topic of money with your adult children can feel just as awkward as telling them about your sex life. But breaking the silence about your financial and medical plans is necessary, particularly for aging parents, if you want your family to be spared from chaos and confusion after you pass away.

Ed Slott, retirement expert and founder of IRAhelp.com, says leaving your loved ones in the dark can only make it more difficult for your family during an already deeply emotional and stressful time. “When the pressure hits and you’re under stress, that’s when mistakes are made, both medical and financial,” says Slott.

To help navigate this touchy topic, we invited him to discuss how to bring this conversation to the table and some of the basics of what you need to cover together.

The parents should always initiate the conversation

If you’re married, the first thing you need to prepare is a unified message to present to your adult children. No one wants to think about it, but in the event that one of you dies first, what arrangements have you planned for the surviving spouse? Once you’ve worked out the details, you should talk to your children together, says Slott.

Getting your reluctant parents to talk

For those of you whose parents are resisting this conversation, Slott says it’s best to bring the topic up in a way that reminds your parents why having the chat is to their advantage. Saying things like: “I’m here to make what you want to happen, actually happen,” or “It would be better if you gave us some clue of what to do so there’s more family harmony during an already difficult time.”

The basics of what you need to cover

Families need to discuss financial and medical issues that might come up during parents’ later years and after they die. For parents with multiple adult children, Slott says it’s wise to assign roles to them based on their strengths. In his own family, he’s ready to handle the money issues while his sister will handle the medical-related questions.

Below are some questions to ask your aging parents:

  • If you become incapacitated what are the long-term care possibilities?
  • Is there life insurance or long-term care insurance available to tap into?
  • Medical power of attorney: Are there living wills or health-care proxies that detail the desires for medical treatment in case the parent is unable to speak for himself/herself?
  • Financial power of attorney: Who will handle your money decisions if you can’t make them yourself?
  • Are your legal documents current? Do you have a will or trust? Who is the attorney you worked with?
  • What about your retirement accounts and beneficiary forms for IRAs and 401(k) retirement plans? Are they filled out properly and current?
  • What are your assets? Are there any mortgages or reverse mortgages that must be paid off?

Getting the answers to these questions can be tough emotionally, so try not to spring it on your family unexpectedly.

Share without sharing

“Parents tell me all the time ‘I don’t want the kids having the key to the castle’ but they want them to know where things are so you can share without sharing” says Slott. If you’re worried about privacy, it might be best for parents to provide just enough information to let their children know how to find the plan or who to contact. This way, you can share those contacts without sharing the actual logins and passwords to your actual accounts.

Who to involve outside of your family

It’s essential to line up professionals before you actually need them because it could cost your family a lot more money to secure professional help during a crisis. Slott advises that you start with an attorney to prepare your will or trust. Next, work with an accountant or financial advisor who can help your family get access to your assets and investments. After that, you may need a social worker who can help your family with Medicare related issues or help figure out appropriate long-term or assisted-care needs.

Affording the help of these professionals may not be easy, especially if you have limited assets. But Slott says, the less you have the more important it is to protect it, so ask for references of professionals you can afford.

“You don’t want this to be the thing that tears the family apart,” Slott says. If your children don’t know your plans or wishes and disagree about how to handle matters, loads of time could be spent fighting in court while all your hard-earned money ends up in the pockets of lawyers — instead of those you love.

Have any money questions? Connect with me on Twitter @jeanie531 or in the comments below.

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