Reversing Roles: When Children Should Talk to Parents About Money

Fourteen years ago my widowed mother had a health event that caused her life to suddenly change course — and the lives of her children and their families changed as well.  As her Financial Advisor, I was in a position to have knowledge of a good part of her financial assets but I didn’t have the whole picture and that proved to be quite a challenge to overcome as we stepped in to lovingly care for her.

I have wondered why l didn’t ask Mom more questions about her finances and personal affairs. I do have recollections of casual conversations when she would say something about her local checking accounts, her burial plot or my father’s WWII experience. She was a relatively young woman and I thought there would be plenty of time to have that “aging parent and money” conversation. For many of us, those conversations are not easy to have because it feels like an invasion of your parent’s privacy and a bit like a no confidence vote on their longevity.

There may be a gradual transfer of your parents’ responsibilities to you as they enjoy a long and healthy life, or there may be a sudden need to step into their affairs due to illness or death. Thus the timing of the money conversation should actually be an ongoing sharing of information.  A discussion of the location of the following nine matters could easily lead to a more in depth conversation about your parents’ financial affairs:

• Titles of their home, cars, boats, trailers, etc. Review how their assets are titled and make changes as desired. Locating these documents at later time could prove to be complicated.
• Financial and healthcare powers of attorney. A review of these documents will show you who in the family will have what responsibilities should your parent become ill or disabled. If these documents don’t exist, this is the time to talk about how important it is to have their wishes honored by the medical and financial communities.
• Birth and marriage certificates. Various local and federal government agencies, such as The Social Security Administration, may require documentation to establish benefits.
• Insurance policies. The location of long-term care, life insurance and annuity documents are especially important. Reviewing both the terms and beneficiaries of your parents’ policies provides an excellent way to discuss their current relevance and make appropriate changes as needed. These policies should be easily assessable by family members for their care and end of life events which brings up another conversation – burial plans.
• Military records. Should your parent become blind or disabled you will need to know when they served in the military and have their I.D. number. Applying for Veterans Affairs benefits without this information may be difficult.
• Professional contact information. Know the names and contact information of their accountant, lawyer, financial advisor, etc. They will be invaluable help if you need to step in to manage your parents’ affairs.
• Personal contact information. Keeping in touch with friends and extended family members will enable your parents to retain these relationships should they move away from their current neighborhoods or require an extensive stay in the hospital.
• A net worth statement. This document should include the location, amounts, titles and contact information for all their financial assets as well as the named beneficiaries on their retirement accounts. If possible, update this statement annually.
• Wills.  It is very important to go through the terms of their wills to insure they coordinate with the titles and beneficiaries of their financial assets. Wills should be reviewed regularly to make sure they reflect current life situations and are up to date with estate laws.

Creating a Family Records Organizer would be an ideal way to compile these records – and by the way, as you help create your parents’ family records organizer I highly recommend you create one for yourself.

By Kristen Fricks-Roman
Photo by Bikerider London | Shutterstock

Kristen Fricks-Roman CFP®, CRPS®, is a senior vice president of Morgan Stanley Wealth Management, Atlanta. She can be reached at kristen.fricks-roman@morganstanley.com.

Kristen Fricks-Roman is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Atlanta.  The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.  Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Please be advised by clicking on a third party URL or hyperlink, you will leave morganstanley.com. Morgan Stanley Smith Barney LLC is not implying an affiliation, sponsorship, endorsement with/of the third party or that any monitoring is being done by Morgan Stanley of any information contained within the web site. Morgan Stanley is not responsible for the information contained on the third party web site or your use of or inability to use such site. Nor do we guarantee their accuracy and completeness.

 Morgan Stanley Smith Barney, LLC, member SIPC.