Conversations between family members about money are taboo and highly stigmatized, even today. So I always find it fascinating when people plan their financial future around the death of their parents knowing that, in all likelihood, they haven’t had a single discussion with them about their finances. Maybe they helped you with a down payment on a home or assisted you through college, thereby shaping your opinion of what they’re worth, but those generosities are a far cry from understanding the true nature of their financial affairs.
There are times when planning around the death of a loved one is acceptable, but anticipating an inheritance without some sense of certainty is generally regarded as inappropriate. Moreover, I can’t begin to tell you how many Boomers I’ve witnessed over the last ten years of my career become overwhelmingly burdened by the lack of planning and communication from their elderly parents. They say they don’t want to bother their (Boomer) children with these matters, but all it really does is create an even greater burden once they’re gone.
The reality is that, unless you’ve seen the estate planning documents and account statements yourself, you probably have no what you’re talking about. Yet, even having this information might not be enough to fully understand what to expect because assets, like final wishes, are fleeting. Life is fickle making predicting the future impossible. Health fluctuates. New relationships can emerge while old ones can sour. What’s here today might be gone tomorrow and your inherently limited knowledge will lead you to make assumptions that just aren’t true.
Health is the single greatest factor to thwart even the most guided of plans. Entire estates and long-term care benefits can be depleted in a matter of years simply because people can live longer than expected. How many times have you heard the story of the seemingly sicker parent surviving the healthier one for years after their partner has passed? Or the horrors associated with cognitive diseases like Alzheimer’s that deteriorates the body and destroys the mind? These situations can dramatically change how much money individuals have to both rely on and pass down to future generations.
Healthcare is a double edged sword for estate planning as advancements in medicine seem to go hand-in-hand with medical costs. You should not be shocked that people are willing to pay more to live longer. I assume that most people will do whatever it takes to stay alive, which means they’ll pay almost any price for one more day here on this earth. This also means that even the best estate plans can be quickly flipped upside down.
Relationships are messy and only further complicate expectations. Parents often say they love their children equally, but we know that’s not always the case. And even when it is, it’s not a guarantee that you and your siblings are going to have the entire pie to yourselves. Relatives, charities and perhaps children/spouses from previous marriages (including yours) could find their way into the inheritance picture. It’s actually more common than you think, so don’t be naïve in thinking it can’t happen to you.
Marriages don’t last forever. My parents got divorced after 35 years of being together. If you think that’s wild, I can share with you stories from other advisors who told me about 80-year-old clients filing for divorce. All of a sudden, everything you knew about your parents financial situation is up in the air. It could be years before they figure out their own financial affairs before addressing what they want to do for you. And, since there’s no age limit on love, new relationships formed later in life may come with certain financial guarantees attached. Nobody wants to die alone and everyone likes assurances, especially as you get older.
The biggest bit of advice that I can offer someone looking for clarity with regards to their parents estate is to sit down and have a discussion. Communication is single-handedly the most powerful tool to set reasonable expectations for both your parents and yourself. Prepare to face strong objections and harsh criticisms, but it is important to convey that your motivations are strictly to ensure that their wishes are met. It is imperative to explain that by not having open and honest discussions around their finances, they run the risk of diminishing your ability to help them protect their legacy and, more importantly, their dignity. If that doesn’t get the conversation started, you should plan to receive nothing.
Conversations are just the beginning and, as I mentioned before, unless you’ve seen the statements and estate planning documents yourself you should expect zero. Taking this conservative approach and planning around the things you both know and control will lead to greater and more positive financial planning outcomes for you and your family. Then, should you be fortunate enough to receive an inheritance down the line, it will truly be an unexpected windfall that can improve the financial planning you’ve already done for yourself.
I am not going to pretend that all of this isn’t easier said than done. It’s not. We’re conditioned to avoid these discussions altogether as these matters pull on the very fibers in which the family cloth is woven. However, like most things in life, nothing worth doing is easy and when it comes to family and matters of the heart, I believe the tumult is worth it. Most of all, you will rid yourself of regrets and guilt later on by knowing you tried your best to help.
Come exercise your First Amendment right on the soapbox known as Twitter:
“I spoke with General Tso. Great man, great chicken. We’re getting close to ending this trade war once and for all.”
— Douglas A. Boneparth (@dougboneparth) August 26, 2019