Having 'The Talk' With Your Parents About Their Finances
Advice from the author of 'Mom and Dad, We Need to Talk'
Cameron Huddleston, author of the smart new book Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances, remembers the birds-and-the-bees talk she had as a child with her mother. Huddleston says she’d give her mom a D at best because the “talk” was a single sentence saying that a man and woman lie together and “make love.”
Sadly, Huddleston says, many of us in our 50s and 60s are having the same kind of unhelpful “talk” with our parents about their finances. She notes in her book that a GoBankingRates survey found that 73% of adults haven’t had detailed conversations with their parents about their finances. And that, the award-winning personal finance journalist maintains, is a giant problem for both generations.
I interviewed Huddleston to find out why, how boomers and Gen Xers can initiate these conversations; what to do if your parent refuses to talk about money, estate planning or end-of-life planning and what she wishes she’d done differently helping her mother with her finances. Excerpts:
Next Avenue: Why did you write this book and who is it for?
Cameron Huddleston: I wrote this book because of my experience with my mother. When I was thirty-five and she was sixty-five, she was diagnosed with Alzheimer’s. I had not had a detailed conversation with her about her finances.
"The twenty-two percent of adults who don't think their parents' finances are any of their business don't realize there's a good chance that their parents' finances will be their business at some point."
When she was sixty, I had had a conversation with her about long-term care insurance and said she should look into it. She had been divorced awhile and was living on her own and I knew if she needed care, a long-term care policy would help. Unfortunately, she couldn’t get coverage because of a pre-existing health condition — not dementia. That would’ve been the perfect opportunity to have another conversation about her finances. It never crossed my mind.
A few years later, when she started having signs of memory loss, I knew I had to meet quickly with her attorney to update her will and to get power of attorney. I knew she had to be mentally competent to sign them and without them I wouldn’t have been able to step in to make health care and financial decisions for her. She was still competent enough, so she did.
That experience led me to writing this book. As I got more involved with my mom’s finances, my friends started finding themselves in similar positions with their parents. They came to me asking how to have ‘the conversation.’ I realized no one should have to go through this alone. I wanted to help them figure this out, so I wrote the book.
And what about your father?
He died at sixty-one without a will and in a second marriage.
Were you surprised by that GoBankingRates survey showing that most adults haven’t had detailed conversations with their parents about finances?
It’s stunning, but it doesn’t surprise me entirely from my own experience. I was a financial journalist and I didn’t think about it!
That survey also found that twenty-two percent of adults don’t think they should ever have this conversation because they think their parents’ finances aren’t any of their business. I can understand the reluctance. But that twenty-two percent who think their parents’ finances are none of their business don’t realize there’s a good chance that their parents’ finances will be their business at some point.
It’s better to have a plan and those legal documents in place and to have a discussion before an emergency arises.
Why does it matter whether adult children talk with their parents about the parents’ finances? What happens if they don’t?
If the parents don’t have a will or an advance health care directive and haven’t given their child power of attorney, then if they are no longer mentally competent — maybe due to dementia or a stroke or a car accident — the child can’t step in and make financial and health decisions. The child would then have to go through a lengthy and expensive court process to be named a conservator or guardian of the parents.
In my book, I write about someone who spent thousands of dollars and nine months to become the dad’s conservator. He had to pay his father’s medical bills himself until he had access to his dad’s bank account to get reimbursed.
People don’t realize that if mom has a stroke and the hospital transfers her to a nursing home, if you don’t have access to her bank account, you can’t sign the checks for her unless she signed over power of attorney.
What are the other types of conversations adult children need to have with their parents?
It could be that your parents didn’t save enough for retirement. You may need to encourage them to move somewhere smaller, more manageable and more affordable.
Or they may not be doing a good job managing their finances. I’m not saying it’s your job to step in and tell them what to do. But if you see that their mismanagement of finances will affect you, it could be to your benefit to try to have conversations to offer suggestions to get them back on track so they don’t jeopardize your financial well-being.
How hard do you think it is for people in their fifties and sixties to talk with their parents about their parents’ finances?
I think people make these conversations in their minds to be more difficult than they’re actually going to be.
Certainly, some parents will resist having them. But I would say a majority of parents will come around if you let them know that you want to have the conversation because you’re looking out for their best interest.
If they say: ‘It’s none of your business,’ you can respectfully respond: ‘It could be some of my business one day if you ever need my help. And as your child, I want to be able to help you. I want to care for you in the same way you cared for me when I was growing up. I feel I owe it to you.’
I think when most parents hear that, they will open up. Hopefully.
Some parents think their kids are asking about a will because the kids are out for their money.
Yes. They may think that. Say: ‘I don’t care what I’ll be getting. I just want to know that you have put your financial wishes in writing so we can do what you want. Because if you don’t have a will, the state has one for you, and the people who will get your assets may not be the ones you want to get them.’
Some of us fear that if our parents resist talking about these things when we first bring them up, they never will. What do you say?
Don’t give up if your parents resist the first time. Keep trying. It doesn’t mean you need to nag your parents every time you see them. But look for opportunities to have the conversations. If they complain how difficult it is for them to take care of the house, that’s an opening for a conversation saying that it might be easier to move into an apartment or a retirement community.
What do you think adult children do wrong when it comes to having the talk?
One of the biggest mistakes people tend to make in their fifties or sixties is they tend to be condescending when talking to their parents. If you approach the conversation from the point of view that ‘I know more about these things and I see you making mistakes and I’m going to point them out,’ that just embarrasses a parent and puts them on the defensive and they shut down.
I wouldn’t point out that your parents are making mistakes. Put yourself in your parent’s shoes and consider how you want your own children talking to you. You need to be respectful.
And you don’t want to give parents ultimatums, like: ‘Mom, Dad, if you don’t tell me details of your finances, I won’t take care of you if you need it.’ That’s not going to work. They’re going to say: ‘Fine, I don’t need your help.’
What are some of the most important topics for the adult children and their parents to talk about and why?
Whether your parent has estate planning documents like an advance directive and power of attorney, and where. They’re essential.
If they don’t have these documents, you want to be sure they meet with an attorney or you can go online for a low cost and get the documents in place.
You want to try to find out how they pay the bills. So if something were to happen, how can we all make sure your bills will get paid? Are they set up automatically or do you write a check?
And then you might say: ‘I would like to help you set up automatic bill paying and online banking.’ I know some older adults can be reluctant and see this as risky, but explain that it’s a safeguard and they can check on these bills every day.
And then, if they’re willing, get as many details as possible about what type of insurance policies they have and their sources of income and their debts. You can ask them to write it down for you with a list of their accounts.
You can say: ‘I’d love to know your user name and password for these accounts, so I can access them in case of an emergency. They may not want to tell you, but they may be willing to write this down.
What’s your advice about doing these kinds of things if you have siblings?
Ideally, you should talk with your siblings before you have conversations with your parents. You want everyone to be on the same page and you don’t want to exclude anyone. If you don’t talk to your siblings about this, they might resent you for leaving them out.
Decide what roles you can all play in the financial lives of your parents as they age. Perhaps one who lives closer will be willing to provide more hands-on care while another might be in charge of the parents’ finances. When you go to your parents, let them know. Hopefully, this is going to lift a burden off them.
It doesn’t work in every family. Some siblings don’t get along or have different ideas about what’s best for Mom and Dad. Point out that it’s not what we think is best for Mom and Dad, but to figure out what they want.
And what do you do when your parent simply won’t discuss any of this and won’t give you power of attorney?
You can say: ‘I understand.' Then you can take one of two approaches.
One is saying: ‘I understand you don’t want to talk about finances now, but let’s think about situations when you would be willing to share some information and you might need some help. Maybe it’s when one of you has a health issue, if Dad passes away and Mom’s left alone. Ask them to identify those moments and write down situations when it might be okay for us to step in. Help make that list and hang onto it. And then when the time comes, come back and say: ‘We agreed we would talk.’
Or you can use a story. Say: ‘I understand you don’t want to have this conversation now and we don’t need to; everyone’s health is good. But I have a friend whose mother was perfectly healthy and she started having issues with her memory and my friend realized if she didn’t get her mother to meet with an attorney soon, it would be too late to step in and help her mom with finances as her memory worsened.’
For power of attorney, you could say: 'Is there someone you are comfortable naming as power of attorney? I understand it feels like you are giving up control. But if you don’t name someone you trust and something were to happen and you were no longer able to make financial decisions on your own, someone will have to make them for you. You’ll want to be sure your bills are getting paid.'
What about getting a third party involved?
That’s a possibility. You could say: ‘I recently updated my legal documents. Maybe you want to meet with my attorney?’
These conversations can’t wait. And as difficult as they might seem, the consequences of not having them can be far worse.