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“Mom, where would you want to live if you could no longer look after yourself? ... Oh, and can you pass the salt?”
There’s a reason why conversations about aging and estate planning shouldn’t happen casually around the dinner table. If not handled with care, they can be uncomfortable and intrusive.
As adult children, clients and their siblings may find it hard to even think about the day their parents are gone or may one day have severe health or cognitive issues that leave them unable to care for themselves and their financial affairs.
However, talking to parents about these matters is critical. Open communication will allow clients to understand their parents’ wishes, provide input, and ensure they carry out their wishes when the time comes.
It will also help lessen potential conflict and uncertainty for family members at an already difficult time.
Getting the conversation started
These discussions often aren’t easy to initiate. One of the best ways to get the dialogue going is to hold a family meeting in which everyone agrees to come together.
A facilitator who acts as a neutral third party can help with the discussion. Typically, a family meeting allows parents to communicate their intentions, to the extent they’re willing to share.
A good starting point is to ask if parents have a will, a legal document that expresses their wishes about how their assets should be distributed after their death, and powers of attorney, a legal document that gives someone they trust permission to make financial and health care decisions on their behalf.
These questions may seem obvious, but it’s surprising how many people – even the very wealthy – don’t have a will. It’s also important to find out how recently these documents have been updated and if they need to be reviewed to make sure they still reflect the parents’ wishes.
Questions such as where they keep their documents and who their key contacts are, such as lawyers, accountants and advisors, need to be asked.
It’s also important to ask about their wishes beyond what is written in the will.
For example, if the parents want each grandchild to receive $10,000, do they care how that money is used? Do they want it to go toward education or a down payment on a house, or do they want to leave it up to each beneficiary?
Don’t expect everything will be covered in the first meeting. The main goal is to learn about their wishes. More family meetings, or smaller meetings with individual family members, will provide input and feedback.
For example, if parents plan to leave a child a specific asset – let’s say the winter vacation home – but it’s better suited for another sibling, this can be addressed.
Beyond focusing on the inevitable – what will happen when the parents are gone – it’s important to discuss the unexpected.
Who will make financial and health care decisions if they become incapacitated? What are their wishes for living arrangements and care toward the end of their lives?
What’s everyone’s comfort level with these decisions? Not having these discussions and documents can lead to conflicts. Siblings arguing over putting a parent in a nursing home can put loved ones in a difficult situation.
A delicate balance
Of course, there’s such a thing as clients getting too involved in their parents’ estate plan. It could be a red flag to their siblings and their parents’ advisors, who might be concerned that the child is trying to influence their decisions in his or her favour.
This can happen even if clients have good intentions and are looking out for their parents’ best interest. There’s no one-size-fits-all solution here – every family’s balancing act will be different. The key to remember is a child’s involvement needs to come from a place of being supportive and should be handled carefully.
These conversations are a balancing act for the parents as well. They may not want to divulge all the details about their assets, how their estate will be divided, and where all their bank accounts are located. That’s understandable.
But even just having that information organized and accessible will be a big help to the parents’ executor and beneficiaries.
If the parents are concerned about privacy, the client could simply say: “Mom and Dad, I don’t need to know all the details about your affairs right now, but is there a way I can help you get organized? Can you share where your important documents are?”
However they approach it, ideally, the client and their siblings will be on the same page. They should try to have a united front when they talk to their parents.
Remember, this conversation isn’t an easy one for parents either. But it will give them peace of mind knowing their estate plan will go according to plan and help their children prepare for the future.
Kate Marples is a lawyer and partner with KPMG Law LLP in Vancouver and works with KPMG Family Office clients on tax-focused estate and trust planning.
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