Have you tried to talk with your parents about their retirement finances or estate plans? If that conversation isn’t happening, you’re not alone.
Thirty-four percent of parents haven’t had a detailed conversation with their adult children about their living expenses in retirement and 43% of parents said they haven’t had detailed discussions about their long-term-care plans, according to a survey of 221 parents (age 55+) and their adult children, conducted for Fidelity Investments. Read the summary.
The barriers to such conversations vary, but tend to revolve around deeply held beliefs — from long-held prohibitions on talking about money or death, to the parents’ fear of losing control over their finances, or even a sense of embarrassment if they haven’t managed their money well, says Susan Zimmerman, a licensed therapist and co-founder of Mindful Asset Planning.
“More often than not, it’s this cultural discomfort with talking about what are still perceived to be taboo topics,” she says.
Parents aren’t the only ones who are uncomfortable. Adult children may be nervous about raising the topic of their parents’ finances for fear they appear greedy or nosy. “That makes them uncertain of how to get a conversation started,” Zimmerman says.
Even when families talk, misunderstandings happen. For example, while 69% of parents say they’ve discussed their will and estate plans with their children, 52% of children say that’s not the case, according to the survey.
Families’ silence on these topics can lead to many problems, not least of which is the potential for serious conflicts among adult children after the parents die. For example, if the parents had good reason to leave more money to one grandchild than the others, but they neglected to discuss that reasoning with their children.
“I’ve seen that destroy families,” says Brad Klontz, a psychologist, financial planner and founder of the Financial Psychology Institute. The adult children stop talking to each other “because they’re certain one of the siblings talked the parent into doing that,” he says. Since the grandmother never discussed her thinking with her children, “everyone is just left to guess.”
Even seemingly minor decisions may cause major family rifts, Klontz adds. Say the father bequeaths a rocking chair to one child and a dresser to another. Even if those items have the same market value, disputes over the significance and sentimental value of such items “can lead to a lifetime of conflict,” Klontz says.
The existence of an estate plan doesn’t prevent these problems. Most estate plans fail, he says, because the parents don’t communicate their intentions. “The intention of the parents is to pass down assets and keep the family together and not to have fighting among siblings,” Klontz says, but “most estate plans fail to do that because there’s not the communication.”
That said, while it’s difficult to surmount communication barriers, it’s not impossible. Here are seven strategies to consider when trying to broach money topics:
Request a meeting
Don’t dive into your money conversation unexpectedly. “Make a request, set an appointment. That’s my first piece of advice around any difficult conversation,” Klontz says. “Don’t just spring it on them.”
Talk about your intentions in a way that won’t put your parents on the defensive. Don’t start with: “Hey, do you have life insurance?”
That type of question might prompt your parent to think: “You’re hoping I’ll die so you can get some money,” Klontz says. “People fill in the gaps. They make up a story, when really that might not be the intention at all.”
Try this instead: “We want to get clear on what your wishes are in terms of your estate. We want to make sure that we all understand what is important to you and what we can do to support you.”
Include your siblings in the conversation, Klontz says, to make sure everyone hears the same message.
Focus on what your parents want
Keep the focus on your parents’ wishes to make it clear they will benefit from this conversation, and to help everyone feel more at ease, Zimmerman says.
For example: “We’d like to understand what your wishes are so we don’t have to be guessing. I’m sure you wouldn’t want us, your children, arguing with each other because we didn’t understand how you wanted it to be laid out.”
Given that money conversations make people nervous, it makes sense to use a tried-and-true communications strategy. Olivia Mellan, a psychotherapist and money and relationships coach, uses a three-step approach that entails mirroring, validation and empathy.
The key is affirming and validating the other person’s values and needs, says Mellan, who is author of the guide “Money Harmony.”
First, the listener repeats, verbatim, what the speaker said. For example, “I hear you saying you would like Anne to inherit the house because she loves it the most and already lives nearby.” Then the listener validates what the person said by expressing what makes sense from his or her perspective. For example, “It makes sense you want to do this because you care about Anne and she has expressed the most interest in staying here.”
The third step is for the listener to empathize with the speaker’s emotional state. For example, “I imagine you might be feeling scared about this, because you’re worried about how I’ll feel about it.” Then the original speaker expresses what they’re feeling.
The process is aimed at stepping inside “the other person’s shoes,” Mellan says. “It creates a safe and respectful climate for communication.”
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Zimmerman uses a similar approach, coined with the acronym ACE: ask, confirm, encourage.
For example, you ask about your parents’ wishes or their estate plan. Then, confirm what you heard. Next comes encouragement, which might sound like this: “We just want to reassure you, mom, that we’re not asking about this so we can get all involved in it but so that we can help in whatever way makes it flow more smoothly for you.”
Avoiding “why” questions is smart, Klontz says. “‘Why are you doing that?’ Now you’ve put somebody in a defensive posture. It’s much better to say, ‘What I hear you saying is you’re wanting to make sure that whatever assets you have you want distributed equally among all of us,’” he says.
“Work hard on listening and summarizing and not jumping into your agenda, because you’ll shut them down or it will lead to an argument,” he says.
Ask for help
Expressing your own vulnerability can get the conversation going, Mellan says. For example, an adult child might say: “I’m lying awake at night worrying about you not having enough money for your old age and that I’m going to end up needing to support you. I want to know if that’s true so I can make plans for that.”
Loving parents “don’t want their kids to be kept awake at night worrying about them. If they can do something to ease their worry, they would do it,” Mellan says.
A similar strategy is to initiate the conversation as a request for help, Zimmerman says. “Parents tend to be more receptive if you’re asking for help with your own matters.”
For example, “We are working on our own financial planning. Because that involves long-term estimating of what we’ll have, our planner has been asking us what your plans are. Is there something you might share with us so we can build that into our own planning?”
That scenario isn’t uncommon in financial planning, Zimmerman adds. “One of the questions we ask clients is, ‘Will you be receiving an inheritance?’ Sometimes they have no idea.”
Skip the details
If the other person seems uncomfortable talking about money, let them know that dollar amounts aren’t necessary, Zimmerman says. “You can say, ‘You don’t have to tell me your specific numbers. We’re just looking for maybe understanding conceptually whether you think you’re doing fine.’”
Look in the mirror
If you’ve had money troubles in the past, your parents may be hesitant to talk with you about money — they might worry you’re going to ask for money, for example.
“Preface the conversation with putting all of the objections out front,” Klontz says. One example, he says, is “I know I’ve had a really bad history with money, but I’m in a really good place financially right now, I promise this isn’t about me asking for any money right now.”
Have a question about the fiduciary rule? Ask it now. The fiduciary rule is set to greatly affect the way retirement accounts are managed, and in turn, perhaps how much investors see in returns. Marketwatch is going to interview Department of Labor assistant secretary Timothy Hauser and Marcia Wagner, an attorney and expert in labor law and fiduciary issues, on Facebook Live from 2 p.m. to 3 p.m. Eastern time on Thursday, Dec. 8. Certified Financial Planner professionals will earn a one-hour credit of continuing education after watching the session. Have a question you’d like to ask? Email them to Alessandra Malito, and we’ll ask them during the live broadcast.