At Equilibrium, we want to help our clients look after those they love. Quite often this might involve conversations around their spouse, partner, or children, but it can also include our parents.
From my own personal experience, talking with parents about money can be awkward (and that’s from someone whose career is based on talking to people about money!). In fact, I’m not alone, as research by Lloyds Bank found that 50% of Brits felt talking about money matters is a taboo subject, more so than sex, religion, and politics.
I believe the adage, “every problem exists in the absence of a good conversation”, still rings true. Although it may be uncomfortable, our parents won’t be around forever and taking the time to put the kettle on and ensure everyone is in the know, is the best way to ease the burden down the line.
It doesn’t have to involve a deep dive into every transaction of their bank account, but understanding their wishes and needs now, can take the pressure off everybody if they suddenly experience a health crisis or pass unexpectedly.
How to start the conversation
We know that every family is different and so too are the dynamics within, however, we thought we’d share our tips on, what can be, a difficult conversation to start:
- Pick the right time
Nobody likes to feel ambushed. Cornering your parents over the dinner table or when nipping in for a cup of tea, probably isn’t going to lead to the most fruitful conversation. Instead, choose a time when everyone is present, and you won’t be interrupted.
- Prepare for the conversation
As Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.” Make a list in advance about what you want to talk about and what you want to achieve from the conversation.
- Set the scene
None of us like to face our own morbidity or mortality. Planning in advance how you approach the conversation is imperative. Ultimately, you want to know these things because you care about them and so conveying this can be an important step. Provide some context, potentially using somebody else’s experience, or explain why you want to know these things.
The focus of the conversation should be on what ‘they’ want. Make sure you leave space to really listen to their plans. Taking the time to understand what led them to certain decisions can be truly invaluable and result in some fantastic stories from their past.
What to ask
Your parents might not feel comfortable sharing everything about their finances right away. Here are some of the things you may wish to discuss:
- Have you made a Will?
Having a will in place is the foundation of estate planning and if your parents don’t have wills in place, this can be a good place to start. You don’t necessarily need to know what they’re leaving to whom, all you need to know is do they have one in place and where is it kept?
Their will is the last written communication they’ll have with you so encourage them to write a ‘Letter of Love’ (commonly known as a ‘letter of wishes’) to accompany what is essentially a dry, legal document to help the family understand the decisions they’ve made.
- Have you got Lasting Powers of Attorney?
This can often be the hardest part but, in my view, is the most important. A parent or family member losing capacity can be heart-breaking. What’s more, it can happen at any time. The last thing you want to be doing at this difficult time is go through a lengthy legal process to ensure the right people are making the right decisions on their behalf.
Again, it’s about what ‘they‘ want to happen and so understanding their wishes in this event is vital.
- Have you got a financial summary document?
Accurate record keeping is a legacy in itself. Step one for most executors or attorneys is to account for all the assets of the deceased. Tracking down where they banked, where they’re pensions are held and the whereabouts of any investments can often be a cumbersome process.
It’s not the numbers in the accounts that are the issue, it’s the time it takes to find them. By preparing a summary of assets and putting it alongside the will can make the whole process significantly easier. Ask them to talk you through it – you never know, it may give you the nudge you need to do start your own record keeping.
- How can I help?
Initially, it may feel uncomfortable to have a conversation about money, but without it, the outcome could be far more stressful and emotional. Remember, you started this conversation because you care and to provide peace of mind to your parents.
This is the first step towards breaking down the taboo around money and there’s no better time than right now to get the conversation started. It may even lead to a shift in the way your parents spend their money now – after all, what is it really there for? See our related article ‘The power of conversation’.