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| The Basics | You, your parents and their money
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It's better to broach a delicate subject now than to tear your hair out later. Here's how to discuss finances with Mom and Dad -- and exactly what you need to find out.
By MP Dunleavey
In the past year and a half, Ive watched three friends navigate the tragedy of a parents death. What took me by surprise wasnt how they coped with a prolonged illness or the suddenness of grief, but the financial mess they faced.
Just when you feel like your world has been torn apart, banks start pestering you for papers, creditors come crawling, you cant figure out your mothers pension -- and on top of it all (no one tells you this), you have to file their taxes. And write DECEASED across the top. By hand. Apparently, the IRS has devised every form that is possible to formulate, except Form 1040-D.
This gave me pause. If my parents, who are edging toward retirement now, were to become ill tomorrow, or, heaven forbid, die, I wouldnt even know where the key to the safety deposit box was. Or whether the family even has a safety deposit box. Or a condo in Biarritz they havent told me about.
In short, I was jolted from my fantasy that as one's parents get older they also get a) smarter about money, or, if they don't, b) they've hired the tooth fairy to take care of everything.
Uh huh.
Enter the financial fairy
Fortunately, I spoke to Violet Woodhouse, a financial planner and family law specialist, who has a firm non-fantasy policy about all things financial -- especially between family members. If you, like me, imagined that your parents have their retirement plans, health-care directives, powers of attorney, wills, trusts, documents, deeds and so forth tidily waiting for you, in most cases youd be wrong, she says. But youd have a lot of company.
3 ways to coax your parents into having this talk
• Given the hits the market has taken, its time to reassess.
• Since the laws on estate planning have changed significantly in the last year, and fewer people may owe estate taxes, you may want to update your financial strategy.
• Itll be fun, honest!
Very few people have their estate planning together. Most people dont even have a will, she says. And nobody wants to talk about it because they feel like, Gee, if I do any estate planning, Im just giving permission for death to come. Thats just denial, basic denial, that we are mortal.
Mortal is an ugly word, but the uncertainty of age and death is what were dealing with here, and it makes for a very touchy topic indeed. My brother and I, who live on opposite coasts, agreed that we should approach our parents and find out not only what their estate plans are, but (since they dont have an estate that we know of; otherwise we wouldnt have had to take out college loans, right?) what their financial game plan is at this stage. When are they going to retire and on what income? Do they have adequate medical coverage? And what about that condo in Biarritz?
Know what you dont know
Out here in hippy-dippy Northern California, there are a lot of New Age catchphrases that take root and spread like foot fungus in a locker room, and you get a lot of people walking around saying the same painfully irritating things. One that isnt too bad goes like this: There are two kinds of not knowing. The things you know you dont know. And the things you dont know that you dont know.
When inquiring about your parents financial plans, or lack thereof, its best to get the answers to everything you already know you dont know, and thereby ferret out those that are bound to take you off guard.
Parents do a lot of financial planning by default, says Woodhouse. For example, they might make one child joint tenant on a property so there would be someone to pay the bills In Case Something Happens. Trouble is, unless they stipulate otherwise in their will, that child would become the sole heir to that property. Oops.
So how do you get some answers? Experts say:
- Size up your parents relationship and figure out who is the financial planner of the two. Thats who you need to talk to, says Woodhouse.
- Approach your mother and/or father in a spirit of friendliness. Think of your parents as money partners, suggests Ilyce Glink, author of 100 Questions You Should Ask About Your Personal Finances.
- Bring scotch.
Financial planning, family-style
Elizabeth McKenna, a lawyer who designs estate-planning products for Nolo Press, suggests that you sit down with an estate-planning program such as Nolos Personal RecordKeeper, which you can buy on CD or download (see link at left). You can get a clearer picture of your parents finances as you enter the details into the computer.
The low-tech version Woodhouse suggests is to make a balance sheet where you record your parents income (Social Security, pension, investments, etc.), as well their debts (mortgage payments, medical bills, car payments, taxes), thus getting a clear picture of their cash flow.
McKenna also recommends asking about your parents insurance coverage and having them sign both a health-care directive and a durable power of attorney, if they havent done so already.
Putting your money where your mouth is
After talking to all these financial planners -- who were surprisingly frank with me about their own parents' money situations -- I was convinced it was time to open communications with my mother. What was I waiting for already? I chose Mom [see tip #1 above], because ever since I can remember she has been the one in charge of the family money. And, after squirming around and getting cold feet, I finally called her.
Most of the problem turned out to be . . . me. Which Nolo's McKenna had warned me about. "The biggest mistake people make is that they're afraid to bring up these things with their parents," she said. "It's actually a very reassuring discussion. Most parents I know find it easier than their children."
I'd been so certain that my typically taciturn mother would put up a huge wall of resistance and retreat into the Financial Cone of Silence that I didn't have a single question ready. Instead, I was armed and ready to spend the whole conversation doing hand-to-hand combat -- so that then I could call my brother and beef about it.
No such luck. It was as if shed been waiting for 10 years to talk about money. How much there was. Where it was. "And my checkbook is in the far right cubby hole in the desk," she went on, ticking off items on some To Do list she'd never clued me in on. "And you remember the password, right?"
"Mom, you never told me your password," I said.
She sighed, that irritating Mom sigh. "Yes," she said, "I did."
I noisily rolled my eyes so she could hear it all the way in New York. "Mom, if I remembered, I wouldnt have asked you."
"OK, the password is . . . and here she named a place we'd gone on vacation about 15 years ago.
"That little island?" I asked.
"Yes, but without the vowels," she said.
I glared at the phone. "Mom! Just tell me! The CIA removed the wiretap last week!"
"OK, OK!" And she told me the password, and we hung up the phone.
I was exhausted. It was very hard, I realized, because you're not simply asking about dollars and sense. You're asking people you love and care for: Are you going to be all right? So clearly I would have to initiate Part II of the conversation to ask all the questions I'd forgotten to get the answers to. Like . . . what was that password for anyway?
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