For Individual Investors in the US

It’s Time to Have “The [Estate Planning] Talk”

Ben Rizzuto, CFP®, CRPS®

Ben Rizzuto, CFP®, CRPS®

Retirement Director


Dec 13, 2021
6 minute read

Fretting about how to broach the subject of wealth transfer with your parents? You’re not alone. Retirement Director Ben Rizzuto offers suggestions on how to make “The Talk” a little easier and more productive.

If you’re the parent of small children, you know there will be a time when you have to have “the talk” with them. This is something that many of us wring our hands about. When’s the right time? How do we even start the conversation? And of course, geez, this is going to be uncomfortable.

Well, you can now add another “talk” to that list: the one you need to have with your parents about their estate plan. More and more younger people are realizing it’s time to broach this subject with their parents. Part of this is the natural cycle of life, but the COVID pandemic also forced many people to think about not only their parents’ long-term physical health, but also whether they’re financially prepared for the future.

In fact, a recent survey found that the pandemic has prompted 45% of 18- to 34-year-olds and 35% of 35- to 54-year-olds to engage in estate planning. However, that urgency was not as high for Americans aged 55 and older, as only 28% engaged in estate planning due to the pandemic.1 This may be due to the fact that some members of this age group have already set up their estate plan (but it’s worth noting that only 33% of Americans overall have a will.2)

The Hardest Talk

This lack of planning and the financial difficulties it can create is exacerbated by the general difficulty we have talking about finances with family members. A 2019 survey from Lincoln showed that, while 93% of Americans believe it is important to set a plan for their family and their own financial future, 47% struggle to discuss finances with their loved ones.3

Conversation - Financial Planning

Add to that the table-turning discomfort children often feel when they are forced to confront parents who may not have done sufficient financial planning. After all, going to the people who raised you and may have financially supported you for a good portion of your life and saying, “We need to talk about money and end of life issues” can bring up all sorts of complicated feelings and previously bottled-up emotions (read: parenting your parents).

If you’re among the many adults who feel powerless when it comes to talking to your parents about their financial situation, I am here to let you know that you have more power than you might think. You also have a right – and often an obligation – to have these conversations.

It may be of some help to know that there’s a good chance your parents are concerned about money issues as well and are likely thinking about how to have these conversations, too. A survey Janus Henderson conducted with the Financial Planning Association in 2019 showed that 44% of parents are somewhat or very concerned with helping their children make better financial decisions and 34% of parents are somewhat or very concerned with communicating about money with their children.4 And let’s not forget the fact that those in the “sandwich generation” are also dealing with the stress of having to take on greater financial (and logistical and emotional) responsibilities associated with caring for their parents as well as their own children.

Clearly, there is stress on both sides of the equation. But I think being aware that their parents are also likely experiencing anxiety should empower younger folks to take the lead in broaching the subject.

How to Make the Conversation Easier

So, how can you feel more comfortable about having “the talk” with your parents?

I think the most non-contentious way to start this conversation is to ask for advice. This allows you to keep the natural hierarchy between yourself and your parents. A possible question might be: “Since we got married, we are thinking about our estate plan. How did you and mom/dad decide who would be your power of attorney and health care proxy?”

Even if they answer by saying that they haven’t made any decisions on this front, you now have the information you need and the opportunity to encourage them to take these important steps.

Conversation - Financial Planning

The ongoing pandemic may also provide the opportunity to be more direct. For example, you might say something like, “You know mom/dad, I’m concerned about COVID and your health, and I want to make sure your legal (or financial or medical) documents are in order should something happen.” This approach can also be used for more specific health-related issues that are part of your family’s history. Whether it’s cancer, heart disease, dementia, or something else, it’s hard for someone to simply shrug off these types of concerns.

Along with the more indirect health-related route, you can also provide direct financial advice by saying, “I read this article the other day that said it’s important for families to talk about estate planning items like a will, health care proxy and power of attorney. Can we schedule some time to gather up everything you’ve put in place and review things that might need to be updated?”

But what happens if your parents do simply shrug these issues off when confronted about them, either indirectly or directly? What if they say, “It’s none of your business.” This type of response is akin to a financial “go to your room!” In my opinion, the best way to respond – respectfully, of course – is with something along the lines of, “Yes, it’s your money, but it could be my business someday. I owe it to you to care for you as best as I can, just like you did when I was growing up.”

Remember that it’s important to be patient with these conversations. They are uncomfortable and they can be complex both financially and emotionally. But they are incredibly important to have, especially when you consider the fact that 70% of estate plans fail, and the majority of those failures are due to a lack of trust and communication.5 Even though it may feel backwards as a child to be bringing these sensitive topics up with your parents, you should feel empowered knowing that you are contributing to your family’s long-term financial stability.

For more information and resources on wealth transfer, be sure to visit our Estate Planning page.

 

1 “For the First Time, Caring.com’s Wills Survey Finds that Younger Adults Are More Likely to Have a Will than Middle-Aged Adults.” Caring.com, 2021.
2 Ibid.
3 “Nearly Half of Americans Struggle to Discuss Finances With Loved Ones, Reveals Lincoln Financial Group Research.” Lincoln Financial, 2019.
4 “The War on Stress.” Financial Planning Association and Janus Henderson Investors, 2019.
5 FUSE Research Network, Janus Henderson Retirement Strategy Group, 2015.