Personal Finance

Andrew Menachem: How to talk to your aging parents about money


When you were a child, you probably put a great deal of thought into asking your parents for an increase in your allowance: What would be the best day and time to pose your request? What would be the most convincing reason? And in two-parent households, would Mom or Dad be the "softest touch"?

As an adult, perhaps with children of your own, it's time to have another conversation about money with your parents. But in many families, you'll need to plan ahead before raising sensitive financial topics like inheritances, estate plans, insurance policies, healthcare costs and other issues.

Here's a game plan for talking with your aging parents about this often-sensitive topic.

▪ Think about the current financial, health and personal issues facing your parent or parents today. Is there enough money income for a comfortable lifestyle? Do they have life insurance or a long-term care policy? Do they have a will or a trust? Is an attorney or family member authorized to make financial decisions for them if they lose their mental acuity? What about their investment portfolio or significant personal assets like a home, jewelry, artwork, boat, recreational vehicle or other personal assets?

▪ Write down all the questions that you would like your parents to answer, including the contact information for an attorney, accountant or financial advisor. If your parents have a will, for instance, where is it and who helped prepare it? If your parents have bank and investment accounts, what institutions manage those funds? Having that detailed information can make it much easier to sort out a parent's financial affairs in the future.

▪ Consider your own financial goals. Would an inheritance from your parents make it easier for you to send your children to college? Would it allow you to retire earlier in your career? Or do you feel like you are making good progress on your own without necessarily needing those extra dollars?

▪ Talk with your siblings, if any, before you talk with your parents. One of the important issues to address is whether everyone is in general agreement about sensitive financial, legal and caretaking matters. Try to find a way to defuse conflicts – particularly in blended families with different sets of parents – before they turn into nasty fights.

▪ After you’ve done your homework, the next step is to set up a meeting with your parents. This might be a one-on-one conversation with you and your Mom or Dad, or a big family discussion with all your siblings during the holiday season. Every family is different, so the timing and circumstances will also vary.

▪ Give your parents plenty of advance notice. The last thing you want to do is to "surprise" them with an unexpected serious conversation about money. This also gives them time to review their own investments, assets and estate plans, so they have this information readily available. In some cases, preparing for a conversation will prompt parents to take action such as drawing up a will or updating its provisions.

▪ Be sure that your parents and other family members understand why you want to have this conversation: to be sure Mom and Dade have a well-considered financial game plan for the future. That involves gathering the facts, discussing the alternatives and taking action to implement the best strategy.

▪ When you sit down to have the money conversion, try to stay focused on the factual aspects, rather than getting swept away by the emotional undercurrents. Talking about money can bring up feelings of envy, guilt, jealousy or embarrassment in your parents, siblings or yourself. But it's not very productive to argue about whether "Mom loved you best" or "Dad never gave me what I wanted." Instead, try to gather as much information as possible.

▪ Don't try to do everything in one sitting. Most likely, it will take time for your parents to gather all the relevant information and think about their needs and goals. You and your siblings may find that your own perspectives changing, based on what you learn from your parents. In any case, don't rush the process unless a medical emergency forces you into making immediate decisions.

▪ Your parents' financial advisor, accountant or attorney can be a great help when reviewing your parents' changing lifestyle and estate plans. Don't hesitate to get permission to reach out to these advisors, as you wrestle with these important financial issues.

Andrew Menachem, CIMA®, is a Wealth Adviser at The Menachem Group at Morgan Stanley in Aventura. Views expressed are those of the author, not necessarily Morgan Stanley, and are not a solicitation to buy or sell any security. The strategies and/or investments referenced may not be suitable for all investors. Follow Menachem on Twitter @AMenachemMS.