Broaching estate planning with aging parents

After watching what her husband’s family endured with her father-in-law’s recent stroke, Jennifer knew she needed to discuss estate planning with her widowed mother, who likely hadn’t addressed these matters since her husband’s death. Jennifer knew her out-of-state sibling would want involvement in their mother’s care decisions, potentially causing disagreements. Plus, her mother owned a successful baking business that employed Jennifer’s daughter and niece, adding complexity to estate considerations.

Financial planners are familiar with situations that share similarities with this hypothetical one. Here, Jennifer’s mom consistently avoided attempts to discuss these matters, always finding trivial reasons to end the conversation. This avoidance perhaps stemmed from painful memories of her husband’s sudden death years ago. With concerns about her mother slowing down and a family history of dementia, Jennifer felt increasingly anxious about establishing plans for her mother’s care and finances before they became necessary.

Why is this so difficult?

Figuring out how to bring up the topic of estate plans with aging parents is sensitive and complicated, particularly when parents are trying to avoid the discussion. There may be concerns about privacy or greed, or in many cases, parents just aren’t ready to face their mortality.

However, having the conversation is essential for clients to not only maintain their own stability through the years but also to ensure family legacies are carried out as intended rather than being lost to unnecessary fees, taxes, bureaucracy, or other avoidable situations. Some families have an open dynamic about money, with heirs and other affected parties brought in from day one and everyone knowing their role and potential inheritance. Other families tend to be more private or avoid the topic altogether.

Why this is important

The need to understand parents’ wishes as they age goes beyond just reassurance that a plan has been put in place. Finding a way to clarify why certain choices were made can help avoid misunderstandings, conflict, and potential heartache when those plans need to be implemented. It’s also vital to making sure that all areas have been addressed, particularly those more relevant to our modern age, such as digital assets and blended-family considerations.

CPA financial planners can help clients facilitate these conversations by offering a framework for topics to address, then coaching clients to successfully start the conversation, which may also enable them to obtain the information they need to make their own financial planning decisions. Here are the key components that should be discussed, based on each client’s family situation.

Bringing it up in a way that leads to a satisfying conversation

Timing can be everything. Popular suggestions for introducing the topic to parents include life events such as the birth of a grandchild, retirement, or a milestone birthday (although clients are unlikely to successfully have a detailed conversation amid cake and balloons). However, using it as an opportunity to express curiosity and request to schedule a family meeting may be more successful when the parent is faced with a life-changing situation, especially when it’s a celebratory event.

If an emotional response is anticipated, clients might frame the conversation around an extreme example, such as sharing a news article about a celebrity whose lack of estate planning led to chaos with their legacy. Wrapping up the conversation by gently requesting permission to schedule short conversations to discuss lighter topics, such as who should receive great-grandma’s dishes or who would be the best caretaker of mom’s houseplants, may make it easier to get into the heavier stuff, such as end-of-life wishes and funeral plans.

Finally, framing the topic as a way to provide clarity and as an act of love and caring toward the family can take the focus off this just being about the parents and their aging. Clients can also point out in the conversation that communicating plans, even if they’re just making sure someone knows where to find everything, can be just another administrative task to address rather than a loaded topic.

Key financial planning components to discuss, if applicable

Providing clients with a comprehensive list of topics to inquire about can help ensure that nothing is missed or forgotten in preparing for the discussion. Areas to consider addressing include:

• Location of documents such as wills, trusts, powers of attorney, and advance health care directives.
• Confirmation of current financial account beneficiary designations.
• Inheritance plans, particularly when there is not an equal distribution of assets.
• Long-term-care wishes and arrangements.
• Contingency plans for cognitive decline.
• Transfer plans for the family vacation home or vacant land that could trigger inheritance taxes.
• Business succession planning.
• Blended-family considerations.
• Charitable giving wishes.
• Digital assets and how to access.
• Social media and other online account access.

By helping clients plan for this topic along with their parents, CPA financial planners can provide them with peace of mind and clarity about their own roles. This process, in turn, may lead clients themselves to take a more proactive approach to their own estate planning and communication plans when the time is right for their own growing families.

For more information on this subject, members of the AICPA Personal Financial Planning Section and PFS credential holders can watch the videos “Discover How to Have Impactful Legacy Conversations” and “Helping Clients Preserve Family Unity in the Wealth Transfer Process.”

— Kelley C. Long, CPA/PFS, CFP, is a personal financial coach and consultant in Arizona. To comment on this article or to suggest an idea for another article, contact Dave Strausfeld at David.Strausfeld@aicpa-cima.com.