pen rainbow

Saturday, August 27, 2016

Saturday Finances—The Talk

I'm not an expert...I'm just paying attention

Talking to the Fam about Estate Planning

The communication gap between adult children & parents

Get everyone on the same page

Facing Reality Together

Talking about inheritance is a hot button for most families, and that is why most people avoid talking about it altogether.  

The reality is that ignoring inheritance issues makes life difficult for the surviving family members and places an unfair burden on those who are best suited to administer the estate.   

A well thought-out estate plan minimizes conflict and ensures that the final wishes of the deceased are carried out.  It also provides a foundation for legacy planning with respect to charitable contributions.  

So, how do you get started?  Read this article by Fidelity Viewpoints:

Fidelity study finds parents and adult children at odds on when to talk about finances.

Survey conducted Febr 26 - March 22, 2016

Key findings
  • 93% of parents surveyed believe that they will not need any financial support from their adult children after they retire.  77% of the adult children surveyed do not expect to provide even minimal financial support for their parents after retirement. 

Think about this.  3 out of every 4 adult children do not expect to provide financial support for their parents, even in advanced age.  Over 90% of the parents said that they do not want to be financially dependent on their adult children in retirement.  

According to 2016 Facts & Figures, 1 in 3 seniors now die with Alzheimer's or another type of dementia, so among those 90 percent who don't want to depend on their kids for financial support, 1 in 3 of them will need full-time care.  

As healthcare needs increase and the demand for specialized care goes up, there will be an increased need for caregivers, facilities, and services that can provide long-term support.  Right now, family caregivers spend $5,000 a year to care for someone with Alzheimer's.  Most families will have to face the cost of eldercare, at some point.    

  • Over 20% of the families surveyed have had no discussions at all about long-term care and eldercare.
  • 3 out of 10 families disagreed as to whether or not the children knew where to find important family documents, such as wills /trusts, power of attorney, and health care proxies.  
  • 4 in 10 families disagreed on the roles that adult children will play with regards to caregiving, executor of the estate, and financial management.
  • 72% of the parents surveyed expect one of their children to assume long-term caregiver responsibilities, if needed.  However, 40% of the adult children identified as filling this role did not know it.  Of those who did, 58% were women.
  • 92% of parents expect one of their children to assume the role of executor of estate.  When asked, more than one in four of the adult children expected to fill this role did not know it.  
  • 69% of the parents surveyed expect one of their children to help manage their investments and retirement finances.  36% of the adult kids identified in this role did not know it.
  • The mean age of parents in the study was 68.1 years old.  The mean age of adult children in the study was 39.1 years old.  

Families Need to Talk

Here's a nice little chart from the Fidelity article above that outlines the dialogue process.  

Allowing this discussion to take place ultimately provides a powerful sense of well being both for parents and for adult children.  If the discussion breaks down, then at least you tried!  :)  Think about what's best for everyone.      

from Fidelity Investments_Fidelity Viewpoints_7/20/16

• families • working • together • in 2016 •