Relatives, roommates, bosses, kids, neighbors, love interests, lunch buddies -- add money interactions to the mix, and things can get pretty awkward (the waiter forgets to split the tab; the cousin has a surefire investment opportunity; the in-laws expect you to join them on a lavish cruise , etc.). Or, worse, relationships and finances can be jeopardized. Here's how to handle one such situation.
Don't give me that look. Everyone knows you've been coveting the walnut-veneered Biedermeier armoire your parents bought on their honeymoon. Breaking out the measuring tape and jotting down the cabinet's dimensions during Thanksgiving dinner wasn't exactly subtle. It's no secret you're praying it's willed to you and not your less discerning siblings.
Sorry, but the awkward "who gets what" conversation will have to wait. (I'll tackle that in a future column.) That's because there's an even more uncomfortable discussion that needs to come first.
"Pass the mashed potatoes. Also, is your will up to date?"
Do your parents (or other elderly relatives you're close with) have a plan in place to manage their personal and financial affairs when they're unable to do so themselves? Do they have wills? Advance medical and financial directives? And does everyone who needs access know where these documents are kept?
If you don't know for sure -- or have only a vague idea that they might have mentioned something about it years ago -- the time to find out is now, not during a crisis, when decisions may need to be made quickly.
I'm lucky that this ongoing conversation with my family has gone a lot more smoothly than the basement summit about the birds and the bees. I write about sensitive money issues for a living, and I've learned that a well-chosen tale about a spectacularly botched estate plan, or a missing advance medical directive, offers a natural segue into this discussion.
How to break the ice
If you're looking for an ice breaker, consider the story about a drawn-out legal battle caused by a non-binding verbal contract, the tale of the bungled beneficiary form, or any of these 10 celebrity estate planning mistakes.
Another approach is to tell them that you've done this work for your family and that it really helped ease your mind. And don't make that a fib. At the very least, start the process of getting all your important papers in order and arming the right people with directions about what to do in an emergency. It really does feel like a weight off your shoulders, and truthfully relating that feeling to your parents is a great way to get the ball rolling.
Recommending someone you've worked with -- a trusted advisor or attorney -- is another natural way to start the conversation. Or pass along any helpful resources you've come across (like this estate planning worksheet we put together for this very purpose). Heck, I gave my parents a copy of The Beneficiary Book (a family information organizer) on one of their anniversaries. (I swear the timing was just a coincidence.) Use your own judgement as to what's going too far, as an overstep might get you promptly written out of the will.
What to find out
We've compiled this estate planning checklist to make it easier to pull together vital information about your financial life. It covers accounts, assets, liabilities, legal documents, important contacts, and other things loved ones and professionals need to know.
Of course, the more details you can get about the state of your parent's estate plan, the better, particularly if they're asking you to play a role in carrying out their wishes. But you don't want them to feel like you're trying to wrest away control, so don't push to the point of discomfort or risk getting sent to your childhood room for a timeout.
Let them set the boundaries. Tell them that you don't need to know specifics about anything that they're not comfortable sharing and that you understand they have a right to keep certain things private. But at the very least, try to find out two things:
- Have they filled out these important documents: A will, a living will (and/or a healthcare proxy), and a durable financial power of attorney? (Here's a more comprehensive list of important documents and what they cover.)
- Have they named a person (or people) to carry out their wishes? That person does not have to be you, or even anyone in the family. But it would be helpful to know who they named. It's no good having a plan in place if no one knows where to find the relevant files.
Finally, make it clear that you are having this conversation out of love and concern -- not out of lust for their money or the Biedermeier armoire with the walnut veneer and the ebonized details.
Facing an Awkward Money Situation? Do tell!
Email me at [email protected] with scenarios you've encountered, conversations you keep putting off, situations that leave you stumped, and humblebrags about deft ways you've dealt with awkward money situations. I'll be picking through them to address here on Fool.com and on our Motley Fool Answers podcast.
