Tuesday, 19 March 2019
After sex, money is usually second on the list of topics that people would rather crawl under a rock than talk with about with their parents.
But as Mom and Dad age—and statistics abound on the millions of Baby Boomers reaching retirement age in the next few years—money becomes a more important topic to discuss.. Here's a breakdown on how to approach this conversation into a few simple steps:
Try to ease into this conversation in a light-hearted fashion. One strategy is to bring up a story you heard on the news about the importance of having savings in retirement, and keeping wills and trusts in order. Another tactic is to start talking about your own financial planning, perhaps mentioning that you've been meeting with a financial planner and how exciting it is to take control of your monetary affairs. Dropping these hints may help warm your folks up to the idea of talking about their money with you.
Before just outright asking for access to your parents' bank accounts, consider talking to some of the key people in their estate planning. Ask them to compile information on any accountants, lawyers, and financial planners they have. Even if the conversation doesn't go any further, this will help if you ever have to intervene in the case of an unforeseen circumstance.
The last thing Mom and Dad may want is to feel like someone is taking power out of their hands, so be careful when asking them about specifics of their financial situation. Explain that you want to help them carry out their wishes. You should also explain that you want to be their advocate —and that they have complete control. Try not to use phrases like, “you should" in the conversation.
Depending on your family dynamic, it may be very important to be fully transparent with the goings-on in your parents' finances. Call a family meeting to discuss topics like estate planning and setting up a power of attorney, and let everyone have a chance to voice opinions and concerns. Ask your parents who'd they'd like to assign power of attorney, then see if that person is willing to accept that responsibly.
This process isn't always easy and can get emotionally charged, so it may make sense to bring in a third party liaison to help facilitate. Your parents' financial advisor or a mediator may be the perfect person for the job..
Make arrangements with your parents' lawyer and financial advisor. This is an essential step in the process and—if possible—should be done while your parents are of sound mind. If they don't set up a power of attorney and become incapacitated, the process of determining who will manage their money can end up in the courts and take a tremendous amount of time to work out.
Talk to your parents' financial planner about whether or not you should set up joint accounts. This isn't always a good idea because if you're added as a joint owner on an account, it means that you will hold equal responsibility for every payment—and your assets could be compromised if a bill is missed. It can make more sense to set up a power of attorney, which would allow that person to have control on how the money is used without putting anyone else's finances in danger.
The bottom line? Start the conversation now, even if it seems premature. It's never too early to get your parents' finances secured. Getting everyone in your family on the same page together can ensure a calm and stress-free future for everyone.
The content provided is for informational purposes only. Neither BBVA Compass, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA Compass or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA Compass does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards
Most people avoid talking about money but sometimes that's impossible. Find out how to navigate seven common situations when money comes up.
Everything changes when you have a baby, especially your finances. But you can take some simple steps to prepare financially when you're expecting.