There are few things more daunting than having to talk with your parents about their finances. And if you’re the parent with adult children, we imagine the conversation may be just as awkward for you. Although this blog post is written for the adult children, we recommend you continue reading nonetheless.
Talking about money is awkward enough, but broaching the subject of stepping in to manage your parents’ money adds a whole new layer of complexity to the conversation. If our clients over these 20 years are any indication, it is very likely, however, that your parents will eventually need your support and begin to lose the capacity to manage their financial affairs effectively.
The sooner you have “the talk,” the better.
But how do you know when it’s the right time to start a dialog on this topic? And how do you open up the conversation in a way that doesn’t create friction or emotional upset either for you or for your parents?
Why this is Such an important conversation
Unfortunately, human nature being what it is, there are people out there in the world who will take advantage of individuals who are beginning to experience cognitive decline and are therefore more susceptible to scams and other forms of manipulation and influence. In addition, a lack of mental capacity can lead to unwise purchase or investment decisions.
Collaborating with your parents (and a Connecticut estate planning attorney) to create legal documents (such as trust and power of attorney documents) is the best way to protect against the risk of becoming a victim of some kind of financial swindle or misstep that could cost them dearly and create hardship both for them and for you.
Without such documents in place, it can be very difficult to effectively intervene in a moment of crisis.
If, for instance, you suddenly become aware of a dangerous financial situation, but you don’t have the proper authority to take steps to avoid that situation, you may have to go to court to establish conservatorship. This can be a slow process and can also expose your parent to a loss of privacy because it will require a disclosure of medical condition and other personal details.
When to bite the bullet and start talking
Sooner is generally better. The best time to talk with your parents about such matters is well before there is any question of capacity. You want them to be able to fully engage in the conversation and express their wishes clearly. Early intervention allows you to engage in a productive dialog that isn’t driven by crisis or overwrought emotions.
That said, it’s understandable if, despite best intentions, you keep putting the talk off. If that’s the case, there are a few red flags to watch for. For instance, general signs of decline and struggle are an early warning sign that time may be running out to have a proactive conversation about finances. If your parent is uncharacteristically forgetful, clumsy, or seems to struggle with routine daily tasks (keeping house, personal hygiene, driving, etc.), that’s an indicator that it may be time to broach the subject of financial management.
Likewise, if you notice anything awry with your parent’s finances or witness any kind of exploitation, you may want get involved more quickly. There may be a pile of unpaid bills, missing money, or a string of reckless purchases. On the more nefarious side of things, watch for
- changes in beneficiaries
- the appearance of unexpected caregivers
- unfamiliar names on bank accounts should also set of warning bells
How to have the conversation with the least stress and emotional strain
Step one: start with yourself. Money is a sticky subject for most people. Before you engage your parent or parents, take some time to work through your own feelings about the situation.
Once you’ve prepared yourself, you can simply invite your parents to talk. The key is to be respectful and let them know that your motivation comes from wanting the best for them. One of the scariest parts of getting on in years is losing control of things, so once you’ve extended the invitation to talk, be patient. You may have been thinking about this for a while, but it may be a completely new idea to them. Give them time to process.
Approach your parents during the most stress-free time possible. In other words, don’t try to do this over the holiday dinner table or when you’re all in the middle of some crisis. Also, in most cases, brevity is your friend. Don’t try to get everything out in one, long talk. Break things up over time. Tackle one piece of the conversation at a time so it’s not overwhelming.
Above all, find ways to help your parent or parents retain as much control and say over their finances as possible. Make sure they know this is not a hostile takeover;! It’s an offer of support.
It’s also a good idea to engage any one of our Connecticut elder law and estate planning attorneys who can help guide you through all the options and choose the legal structure that is most appropriate for your family. No one says you have to navigate this difficult conversation or process on your own.
So go ahead – get brave. Initiating this conversation now will help make things go much more smoothly later.