It seems to me that people often times struggle in communicating with their parents about their financial situation and it also appears to me that most parents are uncomfortable communicating with their children about their own situation as well. So what are we to do if no one is communicating with each other about finances and we live in a country where so much can be accomplished by a simple conversation? I truly believe that it is our personal responsibility to do our best at maximizing our family interest and minimizing the interests of others. People like the Internal Revenue Service or a long term care facility will not make exceptions based on feelings. They have strict laws or rules they will follow to maximize their own interests and trust me they do not feel sympathy for anyone. If we do not take the time to ask questions or communicate our wishes to our family members how are we expecting them to make decisions in our family’s best interests? Here are some ideas on how to bridge the gap either up or down in the communication challenge.
- Come From A Place Of Love – If you approach your parents or children with a tone of voice that sounds like you are interested in the dollar amount you will very quickly make people feel uneasy. If you come from a place of control you will also make people feel uncomfortable. Why not come from a place of love and make comments like “I feel it’s our responsibility to make the most of what you worked so hard to build” or “I really want us to make the most of the opportunities our family has, so could we have a conversation about your wishes and goals for our family?” Coming from a place of love may not get the job accomplished, but it should at least take the edge off of the conversation.
- Schedule A Family Meeting – Our family has started holding a family meeting each January for the last four years and it has been the best thing we have done in a long time. We sit down and we cover topics like what are Mom and Dad’s wishes if they become incapacitated, where do they want to be buried, who do they want to make financial and health decisions for them if they are unable, and what are their wishes for the family businesses they own. By holding these meetings we as children have become very clear on their wishes and it has really opened up communication channels for us kids to be able to clearly understand their wishes. It has also provided an opportunity for us children to communicate to our parents our wishes as well so they can plan accordingly if they need to. I would absolutely recommend this for families with lots of moving parts in their estate. A great book to help with this is “Estate Planning Through Family Meetings” by Lynne Butler.
- Talk About Taxes – Most people do not understand the type of tax consequence their children are facing in their estate planning. Often times our clients biggest assets are their qualified plans through their employers. They have not paid income tax on this money yet, so if they pass away their children will be responsible for those taxes. There are strategies today that can minimize these tax consequences, but beneficiaries must be listed correctly in order to do so. Working with an advisor to help with these consequences can make a world of difference in an estate plan. Finally, talk about the impact of selling assets after the passing of a family member with ownership in real estate property. There are lots of factors that can go into the decisions of the beneficiary like how to buy from their siblings if they want to sell or at what price points they should be willing to sell.
- Talk About Long-Term Care Plans – One of the most over looked issues when it comes to your parent’s financial situation is their plan for long-term care needs. The need for long-term care can wipe out an entire family’s nest egg quickly. Understanding your parent’s plans can be vital to following through on their wishes especially if they are unable to make those decisions for themselves. It may also be vital for you to understand what they would want sold first in the event you had to sell assets to cover these costs. Working through these details can make a world of difference in the success of transferring assets from one generation to the next.
A few simple tips on things to discuss with your family members and how to address those conversations. It will not always work as some people are not comfortable talking about their money or their parents money, but rest assured that in today’s world it is vital to do all you can to maximize your family interests and minimize the interests of others around you.