Supporting Series: The Guide to Legal and Financial Planning Needs of Seniors

2/16/2010 12:00:00 AM

We are proud to unveil "The Guide to Legal and Financial Planning Needs of Seniors," by Homewatch CareGivers. The following book excerpt by Robert Mauterstock is the first in a series of supporting materials that will help you make the most of our exclusive guide.

We are proud to unveil The Guide to Legal and Financial Planning Needs of Seniors, by Homewatch CareGivers. The following book excerpt by Robert Mauterstock is the first in a series of supporting materials that will help you make the most of our exclusive guide. Copies of Homewatch CareGiver’s Guide to Legal and Financial Planning Needs of Seniors can be obtained from your local Homewatch CareGivers or online. We know that the first critical step in planning is having a difficult conversation — and you need to be prepared — which is why we suggest reading this excerpt on how to plan for the discussion.

Setting the Stage for a Family Meeting, by Robert Mauterstock, from “Can We Talk, A Financial Guide for Baby Boomers Assisting their Elderly Parents.”

Transforming the relationship with your parents around money is not an easy task. With the right tools, though, you can do it. You will be able to discuss issues and topics that were previously off-limits and figure out ways to work in tandem with your parents to improve, modify or change their financial circumstances. You will have a new sense of freedom in your communication with each other and no longer fear the forbidden topics of money and death.

But to get to this place, you will have to take a series of well-planned steps that require your patience and persistence. The first step is to plan out a family meeting — to sit down with your parents, review their finances and help them make plans for their future. This family meeting is an integral part of your new relationship and has a number of different pieces that need to be put in place before the meeting occurs. If these pieces are not prepared properly, the family meeting can become a disaster; resulting in hurt feelings, anger, and possibly the breakdown of all financial communication.

One of my clients is a successful business owner. He felt that he could set up a financial meeting with his parents just like he might do with the key people in his business. He decided that part of the traditional family gathering for Thanksgiving would be allocated to talking to mom and dad about their finances, and giving them advice for their future plans. He announced at the Thanksgiving dinner table that the meeting would start shortly after dessert.

His parents felt that they should have been warned that such a meeting would occur. Their perception was that the children were ganging up on them and forcing them to do things that they didn’t want to do. My client ran the meeting, which involved himself and his wife, his two sisters and their spouses, and of course, his parents. Early in the meeting it became clear thathis parents didn’t want to share their financial information with their children’s spouses. My client realized this and asked all the spouses to leave. One of the sister’s husbands felt that it was important for him to be there anda shouting match ensued. The whole meeting became about who should be there and who shouldn’t and quickly deteriorated. Not only did my client not get the meeting he wanted, but his parents have since resisted any efforts to get the family together again to discuss their finances.

The family meeting should be planned well in advance to avoid any such nasty surprises. One of the most important things to do first is to identify who amongst the children is most appropriate to coordinate and lead the meeting. This is the child who parents can easily communicate with, the child who they are comfortable discussing their personal affairs with, and the child who has no fear in asking them important questions.

Who is the “Alpha Child?”

The Allianz Life Insurance Company conducted a study they defined as “The American Legacies Study.” I will refer to their research several times in this book. They gathered information by conducting more than 2000 interviews with baby boomers and their parents. One of the findings their study revealed was the existence of the “alpha child.”  This is the child who keeps the family connected, who is always the first to make sure that family gatherings occur on a consistent basis, and who communicates often with his siblings and parents. He or she is the child who the parents are most comfortable discussing money issues with. This is the person we want to organize and co-facilitate the family meeting.

Since you have taken the time to pick up this book and realize the importance of this subject, the alpha child in your family may be you. Examine your relationship with your parents. If the above listed characteristics describe you, then it is most likely that you are that person. But don’t let your ego get in the way. Be objective in your evaluation of your relationship with your par ents, and your siblings’ relationship with them. If you are married, discuss it with your spouse and ask for his or her feedback.

Obviously if you are the only child, you may think that you don’t have a choice. But in some cases if you are the only child, your spouse may act in the capacity as the alpha child. Your parents may have more confidence in talking over issues with him or her than they do with you. Afterall, you are their child and they may never give your opinions the same weight as your spouse or another person outside the family. Your husband/wife might be brilliant in your parents’ eyes. There is no reason why you shouldn’t take advantage of this situation. I am an only child and I have acted as my mom’s financial advisor since my dad passed away almost 10 years ago. But every time I give her an investment recommendation and it works out, she seems to remember that it was an idea my wife came up with. So whenever we need to discuss an important financial issue with her, I discuss it with my wife first and she will often propose it to mom. It has a much better chance of getting adopted than if I brought it up.

Working With Your Parents’ Trusted Advisors

The second person you want to involve in the family meeting is one of your parents’ trusted advisors. In your own case, your most trusted advisor might be your financial planner or your accountant. But that might not be true for your parents. In their generation, they might not have had much contact with a financial planner. They may never have used an accountant to prepare their taxes. Take a look at their situation. Who did they turn to when they had a family crisis? Who have they sought out when they had financial questions? That is the person you want. It may be a family lawyer, a local bank executive, or even a minister, rabbi or priest. The important thing is that your parents are comfortable with them and trust their advice.

Now that you have identified the two key players in your family meeting, ask them to help you prepare for the event. If you have done agood job in identifying them, then you should have no trouble getting them involved. The alpha child will organize the event itself. He or she will coordinate the date with your parents and your siblings. It is probably best not to tie it to a regular family gathering. It would be difficult to have grandchildren and spouses in the house when you are trying to have a serious discussion. There might be too many distractions. I suggest that if your parents are mobile, you should have the family meeting in the office of the trusted advisor. This will provide a neutral, business-like setting free of distractions. But if they are particularly anxious about travel—or about having the meeting at all—have the meeting in their home.

The trusted advisor’s role will be to present the idea of the family meeting to your parents and convince them (if necessary) that it is a good idea and will benefit the family. He or she will also share with them a list of topics to be discussed at the meeting. The Allianz American LegacyStudy is again a great resource. The thousands of boomers and parents that were surveyed concluded that there were four areas that most families considered important to discuss.

Creating the Family Meeting Agenda

The first and probably most comfortable area for the parents to talk about is “Values and Life Lessons.” These are beliefs that the parents consider important to be passed on from one generation to the next. They may include family customs and traditions the parents want continued, faith and religious-based beliefs, and memoirs and stories that should be shared. One of my clients is completing a written memoir to present to his family to preserve his family’s history and their experience as Jews in Hungary during World War II.  Another client wants to make sure that the entire family continues to get together every Thanksgiving as the family has done for three generations. He feels that this gathering is important to maintain the family continuity. Discussing values and life lessons is the opportunity for parents to share those beliefs, stories and customs they consider important to continue after they are gone.

The second area to be discussed is “Instructions and Wishes to be Fulfilled.” Each Parent has certain things that they want to make sure are taken care of when they are gone, and these wishes must be passed onto other family members. For example, one of my clients has a child who is mentally challenged and has not been able to live alone and take care of herself. Her parents have taken care of her for her entire life. Once the parents are gone, they do not expect their other children to take her in, but they do want to make sure she is placed in a group home and lives a comfortable life. They have made provisions in their will for her financial care.

Sometimes parents want to make sure that a family member is able to get an education or a child is able to buy a home. These wishes need to be discussed. Finally, the parents’ final wishes need to be made known. What type of funeral or memorial service do they want? Where do they want to be buried? Do they want to be cremated? This is often a very difficult topic for anyone to face, but it has been my experience that once it is addressed and plans are discussed, parents feel relieved and can move on to other things. But if these issues are not brought up, misunderstanding and hurt feelings can often result. Just recently, one of my clients died. She was 92, but had never made it clear to her children what type of memorial service she wanted and where she wanted to be buried. Her two children fought for more than two months to determine where she should be buried. One said that she wanted to be buried next to her husband. The other stated that her mother’s friend, Doris, had told her that mom wanted to be buried with her parents in a location much fartheraway. The second child won, but now the children are not talking to each other.

The third topic to be discussed at the Family Meeting is “Personal Possessions of Emotional Value.” Are there certain pieces of furniture, a musical instrument or jewelry that a parent wants to make sure are passed on to a favorite niece, nephew or grandchild? My mother wants to make sure that a piece of furniture she inherited from her mother goes to one of her nephews. Some possessions have enormous emotional value to their owners. A favorite set of golf clubs, a photo album, or a special jade ring can often become a very special gift to a family member that reminds them of their aunt or uncle, parent or grandparent for many years. Think of your own family. Are there certain valuables that you want to make sure get passed on to certain people?

The fourth and last topic to be discussed at the family meeting is the one probably most difficult to discuss, “Family Assets and Real Estate.” I don’t believe it is important at this meeting for parents to be specific as to who will get what, but I do think it is important that the family know what the resources are. This is a very valuable exercise for parents to conduct. It forces them to do an inventory of their assets, wherethey are, what account they might be in, and what they are worth. Often, couples will have bank accounts and CDs at a number of different banks. Deposits for pensions and Social Security may go to different accounts. It can be quite confusing for children to uncover.

If there is any substantial family real estate, such as a shoreline or mountain vacation home, it is very important that the future of this real estate be discussed. I have seen too many times that a valuable piece of real estate becomes a wedge that tears a family apart. One child may be passionate about keeping the property in the family, while another lives far away and just wants the cash. It can create enormous discord between family members. The parents and children must sit down along with the trusted advisor and outline all the options available to them. Each child must make clear what their wishes are. Then the parents need to take some time with their advisor to discuss the impact of different choices. If the parents do not make a decision regarding the disposition of a valuable family property and it is left to the executor, I can assure you that it will become a very difficult family issue.

Preparing Yourself for the Family Meeting

Once the trusted advisor has discussed the agenda for the family meeting with the parents, and the alpha child has coordinated everyone’s schedules, you are ready to have the meeting. Although it seems like a very difficult and perhaps impossible task, I assure you that once the family meeting occurs, everyone in the family will be thankful. For many families, issues like finances and death have carefully been avoided at family gatherings for years. But it is on everyone’s mind. It’s like the big white elephant that sits in the middle of the room that everyone tries to avoid but cannot overlook. Once communication has opened up and the four areas I have recommended have been discussed, a burden will be lifted from the family. There is a lightness and freedom to discuss topics that were left unsaid for a long time. Future family gatherings will be less stressful, because doubt has been removed and everyone knows where he or she stands. Your parents will experience much more comfort and less anxiety facing the problems of growing old, knowing now that the family is working with them.

You may find that one or two family members will try to undermine the meeting, using the excuse that it will upset your parents or will uncover old issues that shouldn’t be discussed. But don’t let them deter you. Consider the alternative. Do you want to keep everyone in the dark until after your parents have passed away and then deal with everything in a crisis mode? Or do you want to discuss things rationally and clearly with your parents and siblings so that everyone is included? The choice is yours. If one of your siblings does not want to participate or warns you that an open conversation with your parents is dangerous, thank them for expressing their opinion, but do not be deterred from having the meeting. Encourage them to attend. Consider either audio or video recording the meeting and providing them with a copy. Get them involved in any way you can. You do not want them coming back to you five years after your parents have died and inferring that everything was done your way and they didn’t have any say. Don’t give them that weapon to use against you.

The Bottom Line

If you can identify the alpha child in your family, work with your parents’ trusted advisor, and put together a meaningful agenda, you can conduct a very successful family meeting. This family meeting will alter your relationship with your parents and set the stage for successful future dealings with them.

Robert Mauterstock, CFP®, CLTC is recognized as an expert in the areas of retirement income planning, long-term care planning and veterans’ benefits. He has been a financial advisor to hundreds of families over the last 30 years and has helped them achieve a worry-free, comfortable retirement. In addition, he has helped many families deal with the chronic illness of a family member. He has worked with them to create a long-term care plan using Medicare, Medicaid, Veterans’ Benefits, and other resources to protect their assets.

To learn more or purchase a full copy of “Can We Talk, A Financial Guide for Baby BoomersAssisting their Elderly Parents”, please visit http://www.parentcareplanning.com/index.html.

Robert Mauterstock

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