Some parents simply aren’t comfortable sharing financial matters with their children, and a strategy may be needed to begin the difficult conversation.
The day may come when you realize that your parents are getting old. They may be losing their ability to stay on top of routine money matters, or they may lack the knowledge to handle some of the bigger issues of later years, such as tax and estate planning. This can be very difficult to witness. But now it’s your turn to gather your strength and help the people who raised you.
If you’re lucky, your parents are willing to accept your help and are open to discussing their financial situation with you. But for many people, it’s not so easy. Some parents simply aren’t comfortable sharing financial matters with their children, and a strategy may be needed to begin the difficult conversation.
Initiating the talk
Gently easing your parents into the theme often works best. You could approach the subject by mentioning a real-life financial situation involving someone you know, such as a conflict among siblings over an inheritance, or a case of fraud that targeted a senior. Or you can go into your own financial life. For instance, you can mention that you’re updating your will, then lead to a question about their will.
If you think the money talk is going to be overwhelming for your parents — or for you — consider having a series of little chats now and again. For example, one time you might ask if they have a power of attorney or enduring power of attorney (mandate in Quebec). On another occasion, you might ask about their will. If you have siblings, it may help to band together and share the effort.
Finding out about finances
Very important to find out (but possibly difficult for your parents to divulge) is their financial status. Is their retirement income able to cover their expenses and lifestyle? Do they have the financial resources to meet future contingencies such as health care needs?
Ask what insurance coverage they have — not only life insurance, but also any long-term care coverage. It’s important for someone — whether it’s you, a sibling, or your parents’ lawyer — to know where these policies are and who the issuer is, in case a claim needs to be made.
If your parents have significant assets, such as a vacation property or investment portfolio, they may not be aware that their death could trigger a sizeable taxable capital gain. An estate plan, possibly including one or more trusts, might help preserve their assets.
Also, find out if your parents are aware of senior fraud and how it’s perpetrated. You may want to suggest they check with you first whenever an individual or business asks for money or offers a service.
How you’re affected
Once you’ve gathered information from your parents, you’ll have a better idea of how you can help them. That might range from simply helping them with their day-to-day banking to providing them with financial support.
If you are named executor or co-executor of their will, you’ll want to know where the will is kept, along with any other important items, such as a safety deposit box key. You’ll also want the names and contact information of their lawyer, accountant, financial advisor, banker and other professionals. Do you have financial power of attorney and/or power of attorney for personal care for your parents? These documents allow you to make financial and personal care decisions on their behalf. You’ll also need contact information for your parents’ physicians and medical specialists.
If you have siblings, it can be very beneficial to encourage your parents to communicate their plans for your inheritance. Any unexpected issues among siblings can be dealt with now, avoiding conflict after your parents’ passing.
Helping your parents is all about finding out if they’re in control of their financial life and stepping in if they are overcome by financial issues. The sooner you start talking, the better. If you wait until a health or financial issue develops, it means starting off in a stressful situation. If all goes well, your parents will see your involvement not as an intrusion, but as a way to show you care.
Sometimes, it may be beneficial to have a knowledgeable, impartial third party present for family conversations on financial matters. If that’s the case, be sure to consult your advisor.
This communication is published by CI Global Asset Management (“CI GAM”). Any commentaries and information contained in this communication are provided as a general source of information and should not be considered personal investment advice. Facts and data provided by CI GAM and other sources are believed to be reliable as at the date of publication.
Certain statements contained in this communication are based in whole or in part on information provided by third parties and CI GAM has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document.
Information in this communication is not intended to provide legal, accounting, investment or tax advice, and should not be relied upon in that regard. Professional advisors should be consulted prior to acting based on the information contained in this communication.
You may not modify, copy, reproduce, publish, upload, post, transmit, distribute, or commercially exploit in any way any content included in this communication. You may download this communication for your activities as a financial advisor provided you keep intact all copyright and other proprietary notices. Unauthorized downloading, re-transmission, storage in any medium, copying, redistribution, or republication for any purpose is strictly prohibited without the written permission of CI GAM.
CI Global Asset Management is a registered business name of CI Investments Inc.