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How to Talk to Your Parents About Money

Jeff D. Opdyke, The Wall Street Journal Online

How difficult can it be to talk to your elderly parents about their finances? Just ask the questions for which you want answers and then catalog what Mom and Dad say, right?

Good luck with that.

For many families, the necessary answers won't be that easy to pry loose. Just as you are likely quite private with your own finances, your parents are probably private with theirs. They easily could look suspiciously upon your unexpected queries about their money, what they spend their Social Security check on, where their bank accounts are located and their plans for distributing an estate when they pass on.

Don't be surprised when Mom or Dad — or both — delicately or brusquely brush aside your advances, stall with providing adequate answers or even express worry or anger over perceptions that you might be out to wrest control of their financial freedom or, worse, rob them of their assets before they are dead.

Dramatic? Yes. But the last decade or so has been filled with so many news stories of elderly victims of financial abuse, statistically perpetrated most often by a family member, that aging parents can't help but question a child's intentions.

In short: Mom and Dad may feel they have reason to fear your unwanted intrusion into their finances. So those answers you want aren't always forthcoming.

Those parents who do want to talk — the ones who implicitly trust their children and want their kids involved in decisions — don't always know how to tell you what they want to say. They don't know how to ask the questions that have them concerned, and they worry they will be thought of as financially incompetent. Sometimes, they simply don't know how to begin the conversation.

Parents, of course, aren't the only ones incapable of expressing themselves. Children, too, feel intimidated asking Mom and Dad highly personal questions about an aspect of their lives that might have always been private. Kids often assume parents don't want to talk and so never raise the questions they need to in order to help their parents manage their day-to-day finances. Others simply refuse to contemplate their parents' mortality.

This lack of communication is a major problem in the unique relationship between elderly parents and their grown children. Once it is too late, it is much too late. When a parent falls ill or dies, you suddenly are thrown into the tempest unprepared for all that you will confront.

'Can We Talk?'

The time to initiate The Talk is when your parents' financial self-sufficiency becomes an issue you spend time thinking about yourself. After all, thoughts about a parent's financial life generally don't just pop into your head without reason.

The best way to begin is with a few simple words: "Mom, Dad…can we talk?"

You might not be able to pinpoint exactly what has you concerned, and that is fine. The point isn't to recognize the worrisome issue immediately, only that you are worried and want to understand your parents' finances better so that you can help if and when the time comes.

Sometimes parents will signal when they want to have The Talk. A parent might be fretting about paper losses suffered in the stock market or worrying about replacing a car. Maybe he is complaining about a large medical bill or an overdue utility statement that has destroyed his budget. Such comments might be a parent's way of trying to draw you in to a conversation they have wanted to have for a while but were afraid to initiate for any number of reasons.

Breaking the Ice

More times than not, people are reluctant to share the innermost details of their wallet, even with their offspring, out of fear they soon will be separated from their money in some reprehensible fashion. That taboo is particularly strong among the elderly, who grew up in an era when money wasn't discussed openly among family members.

There also is the issue of pride. Every adult wants to feel capable of managing the finances of daily living. Indeed, starting at an early age money management is a large part of what many of us define as independence.

Little wonder, then, that broaching the subject of Mom or Dad's personal finances naturally raises defenses in parents who have been in control of their own pocketbook for decades. And some people, even in their dotage, simply don't want to be reminded of their mortality.

Breaking the ice is a game of perception. Come on too forcefully, as though you are trying to commandeer their money for their own good, and Mom and Dad will shut down, concerned that you might be after their money for your own uses. Come off too meek, as though you are just a friend asking if everything is OK, and they easily will deflect your questions with, "We're fine. There's no reason to worry about us, honey."

You want an approach somewhere in the middle of that spectrum. You want to be direct and honest. Yet you should be clear that while you might not try to delve into every last aspect of their financial life, you aren't taking no for an answer — because understanding how you might be called on to help in an emergency is that important.

Your parents might not open their wallet to disclose the secrets to their financial kingdom immediately. But they are much more likely to respect your approach because it clearly leaves them in control of the process and tells them you aren't out for selfish gains. Moreover, they are likely to see that you are being sincere about wanting to help them when they ultimately need the help of someone who they want to be able to trust.

That will go a long way in setting a parent's mind at ease.

And even if your parents aren't inclined to open up at the moment you raise the topic, there is as a good chance you will receive a phone call in the not-too-distant future with an offer to sit down and talk about finances. When that day arrives, you also are quite likely to find that Mom and Dad aren't only willing to talk, they might even have an envelope waiting for you that contains the keys to their personal financial vault: the locations of accounts, copies of insurance policies and other important paperwork and instructions on how they want to handle their end-of-life issues.

Of course, your parents might not play ball. For whatever reason, they can still say no to your advances, and there is nothing you can do. Unless a parent clearly shows signs of a medical issue that prevents them from acting in their own best interest, you can't force yourself upon their pocketbook. You can ask. You can try to be persuasive. You can provide ample evidence that you want to protect and help them, and that you will stay clear of their accounts until you are asked to step in.

But if the answer is no, the answer is no — and your only choice is to back off graciously. You have made your concerns known, and if your parents ever reach a point where they want—or need — help, they know they can turn to you.

What Not to Say

It as a staple of sitcoms: the inappropriate comment that suddenly quashes the protagonists' efforts up to that point. The same problem arises all the time when otherwise well-meaning adult children endeavor to help their parents. You say the wrong thing or take the wrong tone, or your parents simply perceive your words and tone the wrong way, and suddenly your efforts are dead in the water.

As such, what you don't say — and how you say what you do say — are crucial factors in The Talk.

Thus, the primary rule: Avoid anything that sounds like blame. Criticism and condescension are off the list, too. Basically, never utter statements such as, "You brought this on yourself"; "This is all your fault"; "You don't understand" (implying your parent isn't as smart as you); or "You really screwed this up."

The worst thing you can do is to get mad, raise your voice, yell, or threaten to take control of your parent's finances anyway or to seek legal advice in helping you take control. Such outbursts and threats only highlight parental worries that your true interests lie with the money—not their well-being.

Along these same lines, don't impose your will or take control of situations, accounts or decisions until a parent asks you to do so. (Clearly, in an emergency, if Mom or Dad falls ill or is somehow incapable of managing his or her financial life, you must impose your will out of necessity, but that is a very different circumstance.) A parent might ultimately want you in charge, but it is a decision you want your Mom or Dad to come to and voice independently.

Parents aren't always looking for to you to assume control of their finances; in many instances, they simply want your input because they value it or because they trust that you will lead them in the appropriate direction even as they maintain financial autonomy over their own wallet.

As such, when talking to parents about their money, their financial decisions, bequests they expect to make and other end-of-life issues, structure your comments and questions to emphasize the word "you," as in: "So, how do you want to handle this?" or "What can I do to help you manage this issue?" With this approach you are empowering your parents and de-emphasizing whatever self-interest you might have, allowing your parents to focus instead on the needs they want to address.

Once again, you don't want to offer solutions that seem to put you in charge of their money or somehow appear to lock them out of the ultimate decision-making process. Instead, you can approach this a couple of ways:

• Offer to research the issue and then report back with multiple options that you two can then discuss together to determine which path your parent thinks best fits the need;

• Suggest that you both visit with a family-law attorney, a financial planner, an estate planner or whatever expert is most appropriate to the situation. This way you are obtaining with your parent unbiased, independent advice—and that independence will help buffer you against any complaints that might arise from a parent or siblings (and those complaints arise within families far too often to be overlooked).

You must act as though you are your parent's personal fiduciary, and that means every action you take on your parents' behalf must be unmistakably in their best interest, even if those actions ultimately mean you lose out on some or even all of your inheritance.

I know some people who will scoff at that, specifically grown-ups who think Mom and Dad are effectively baby-sitting the nest egg they built over all those years simply for their children to collect one day.

If you share that mentality, you might consider begging off of any request for assistance your parent makes, because you risk making decisions that will cause the kind of friction, ill will and fights that have cleaved apart many a family.

Tread exceedingly carefully in that world.

Brought to you by Dow Jones

Originally published August 6, 2011

©2013 Dow Jones & Company, Inc. All Rights Reserved.

The views of the authors of these articles do not necessarily represent the views of First Republic Bank.