Managing Family Financial Matters

  • Having a family meeting is a good place to start talking to aging parents about their financial situation.
  • A family meeting should be a planned, structured conversation between aging parents and their children.
  • Identify the challenges of caring for current and future financial needs of aging parents then set up a plan.

Money talk with aging parents

Making poor decisions about money and investments can have consequences at any age. As we grow older, our ability to reason, process information, and retain and recall details declines.

Simple acts like being able to identify coins, count money, make change, pay bills, and handle accounts can be mentally challenging for aging parents. Mom and dad may be too embarrassed or value their privacy too much to ask their children for help.

Many adult children are uncomfortable prying into their parents’ lives — not to mention their finances — so they tend to put off the “money talk” as long as possible.

A recent government forum briefing paper highlighted a survey conducted by Investor Protection Trust that learned almost one in five people (18%) between the ages of 40 and 70 or older said they needed help with everyday money management in the past year. (For this survey, money management was defined as making deposits and transferring money, sending payments, writing checks, and balancing accounts.)

An infographic that says 71% of adult children with a parent 65 or older said their parent handles personal finances themselves. Source: federalreserve.gov

The survey also revealed the majority (71%) of adult children with a parent age 65 or older said their parent handles personal finances themselves.

Planning a family meeting

You may assume your parents have planned for their later years. The reality is many aging adults have not. Unless your parents have already discussed their financial future with you in detail, chances are they are not as prepared as you think. Talking to parents about their finances is awkward and requires thought — sometimes even rehearsal.

Holding a family meeting is one way for parents and children to break down the financial communication barriers. Family meetings on daily — and long–term — money matters do more than enhance trust and communication between family members. The conversations also help children understand the immediate wants and needs of their parents as well as honoring their wishes for wealth transition to future generations when the time comes.

As Abbot Downing’s Managing Director of Family Dynamics and Education Arne Boudewyn describes it, “Family meetings are one of the most important tools that families can use to perpetuate a healthy legacy and position next generations to successfully steward the family’s wealth. Holding family meetings with some regularity can help a family develop, grow, and prosper across time.”

Structuring a successful meeting

According to Boudewyn, family meetings have three main purposes:

  1. Supporting effective communication
  2. Providing a forum to make collaborative decisions
  3. Educating heirs and other stakeholders about financial literacy and family leadership requirements

Here are some tips to help you plan the meeting and get the conversation started:

  • Explain to your parents why you want to have a financial discussion. Emphasize you want to make sure they are going to be okay in the future.
  • Let your parents know you want to do the right thing for them as they age. Ask them to buy into the idea and set the date for the talk.
  • Plan the conversation now, before a financial or health crisis happens. Family crises seem to bring out the worst in people — stress levels can run high, especially if there are unresolved family issues.
  • Pick a quiet, private setting for the family meeting. Festive holidays or family gatherings may not be the best time for a serious discussion.
  • Ask your parents whom they want to include in the meeting. Try to have siblings and other family members attend in person if at all possible — if not, set up a conference call.
  • Gather as much information as possible before the meeting. Learn as much as you can about housing choices, local service programs for the elderly, health care options, and government programs your parents may need in the future. If necessary, assign homework to family members attending the meeting.
  • Prepare an agenda and set the ground rules. An agenda will help keep everyone on topic. The ground rules will help keep tempers in check and opinions respectful.

Most important, be patient with your parents. Role reversals are never easy. It’s difficult for mom and dad to make the transition from being in complete control of their finances to sharing the information and control with others — especially their children.

Deciding what to talk about

Unless your parents have already discussed their financial future with you in detail, chances are they are not as prepared as you think.

In general, you need to know what resources your parents have available for their own needs. If you need to contribute to their well–being, you can plan for it. You also need to have an idea of how they are transferring their assets to family members and organizations they support.

Here are some possible questions for the family meeting:

  • What health insurance do your parents have and is it adequate?
  • Who should make health care decisions in the event one or both parents cannot?
  • What plans have they made for long–term care insurance or facilities?
  • Where do mom and dad see themselves living five or 10 years from now?
  • If they need living assistance, what type would they prefer?
  • Do they have enough money, or will they outlive their savings?
  • Are they comfortable with their investments, rates of return, asset allocation, Financial Advisor?
  • Are important estate planning documents in order, and does another family member have access to them?
  • Does someone your parents trust have a complete list of emergency contacts — doctors, attorneys, tax advisors, Financial Advisors, and close friends?
  • Is another person listed as an “additional authorized signature“ on checking and savings accounts?
  • Have all beneficiaries on accounts and policies been updated recently?
  • Does a family member have a set of keys to their home, car, and safety deposit box?
  • How have they handled their estate?

Getting started

An infographic that says 18% of people 40 or older said they needed help with everyday money management. Source: federalreserve.gov

Don’t be afraid to ask for help with this process. This article is an excellent resource for recommendations that might make sense for your situation.

Professionals such as your parents’ doctors, attorneys, tax advisors, and Financial Advisors can help too. This Wells Fargo Advantage Funds article talks about the role a Financial Advisor can play in assisting families with difficult conversations and decisions. Family members may not be able to agree on a course of action, or they may not be knowledgeable enough to know what’s best. A Financial Advisor can help.

Next steps

  • Talk to your parents about setting up a family meeting.
  • Decide what topics need to be discussed at the meeting and prepare an agenda.
  • Assign homework to other family members so they can share their findings at the meeting.
  • Consult with professionals involved in your parents’ lives to gain insight into their situation.

Wells Fargo Advisors and its affiliates do not provide legal or tax advice.

Abbot Downing, a Wells Fargo business, provides products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries.

Special Reports

A collection of the most recent thematic reports from Wells Fargo Investment Institute that cover varying topics of interest and importance to investors.

Read Our Insights
CAR0116-03082
CEX1707