When you were a kid, your parents dreaded the talk they had to have with you. You know the one. Well, now that you are an adult, there’s a talk you need to have with your parents that is likely to be just as squirm-worthy – which is why so many of us put it off.
It’s about money. Specifically, your parent’s money. The money that may become yours one day. Or may not.
Whether you or your parents think it’s none of your business, it is. You are most likely the one(s) who will need to deal with all the financial issues your parents leave behind when they become incapacitated or after they die.
Not knowing anything about their finances will place you at an immediate disadvantage, making what will be a hard job almost impossible.
Talk is cheap – not if you don’t have this conversation
So how do you get the conversation started? Here are some tips from a recent article “Mom and Dad’s Money Secret (and How to Get In On It)” from Money Magazine on the subject:
Share a story with your parents about someone else who didn’t talk. You need to know more than where to find the will, you need to know if parents have executed powers of attorney, advance health care directives or a trust as well. You need to know if they have life insurance or other assets and, if so, where the policy is located. You need to know if they keep a list of all their debts and, if they bank and pay bills online, you need their log-in information for each account.
Be sure your parents do NOT store their important documents in a bank safe deposit box because getting at them could require you to obtain a court order. Use a strongbox or fire proof safe that is kept in the home instead. Or make sure you are a signer (and there are back-ups besides you) on the safe deposit box.
Tread lightly, bring in the troops to back you up. Your parents may feel more comfortable discussing financial issues with their attorney or financial planner present to facilitate the conversation. They may also feel more comfortable talking with all their children at once, or to only one – take family dynamics into consideration.
Talk about your plan. Talk about your plan, then bring up the surprise expenses that can arise. Chances are you will need immediate access to cash in order to pay expenses related to a parent’s passing. Since probate can be a lengthy process, you may want to plan for this eventuality by having parents establish a revocable living trust, which allows assets to pass outside probate.
By Jac Schuster, an Estate Planning attorney in McKinney. Learn more at jacschuster.com.