THE TALK

HAVE YOU HAD “THE TALK”?

While it’s not necessary easy or pleasant, helping family members or other people in your life prepare for retirement by having “the talk” might well be the most valuable thing you can possibly do.

No, not the birds and bees talk with your overwhelming. Bad enough, right? Then the other shoe preteen ... the one with your parents or dropped. A neighbor found Mary unconscious in the other aging family members to discuss kitchen. After getting her to the hospital, she called Sally their finances, health, and longer-term to give her the bad news. wishes and desires. Sally called her brothers. With Jeff needing full-time I’m lucky because my parents and I have custodial care and Mary in the hospital, someone had to always been pretty open about money travel to their parents’ house to figure out what was going matters. But for many people, it can be hard to get on. parents to open up about such topics. Still, it may be one Neither brother would lend a hand. Both said jobs and of the most important conversations you’ll ever have. other responsibilities prevented them from helping. (And if you have siblings, they should be in on it, too.) To And since Sally only worked part time for a little extra better explain why, I’ll give you a hypothetical case study spending money, they said she should be the one to drop below... everything. First, she visited her mom in the hospital. The doctor Sally, Tim, and Howard were siblings who lived in different said her mom had suffered a severe concussion, was still parts of the country. Their parents, Mary and Jeff, were in unconscious, and might need around-the- clock care. their mid-50s and looking forward to an early retirement. Then he asked if Mary had a living will and a healthcare Mary was a school teacher for 25 years and Jeff was an power of attorney. “I don’t know,” Sally said. engineer with a local government agency. Next, Sally went to see her father. A nurse and the Between pensions and overall thriftiness, a comfortable neighbor were there. The nurse told her that Jeff was and secure retirement seemed a sure thing. slowly getting dementia and recommended that he be moved to a long-term care facility. Meanwhile, she’d make Fast-forward 10 years arrangements for an aide to spend the night. Sally called Jeff is playing a round of golf with his buddies. He’s her brothers to discuss the situation. “Whatever you think walking up to a green, clinches his chest, and collapses. is best,” they both replied. He’s had a stroke. Now she had to make some tough decisions. The nurse After a week in the hospital, Jeff is discharged but helped her find a decent long-term care facility for Jeff. requires in-home nursing care. His wife Mary was at a But before he could be admitted, the business office loss. Jeff had handled the family’s finances. She hadn’t wanted to know how they were going to pay for it. even written a check in years. Toss in dealing with Jeff’s And did she have the authority to make financial and nurses and home care aides eight hours a day, and it was healthcare decisions for her father? They told her that

Medicare wouldn’t pay, but perhaps her father qualified for Medicaid. They also asked: Does he have a long-term care insurance policy? Does he have investments that could be used? While at the nursing home, Sally called her brothers to ask if they knew. “I don’t know,” was their joint response. “But do whatever you need to do.” Sally returned to her parents’ home and dug through files in her father’s desk. She spent several hours sorting brokerage statements, bank statements, credit card statements, correspondence, and insurance policies going back 10 years. She concluded that her parents had more than 100 holdings with five brokerage firms. There were no long-term care policies. Nor could she find paperwork indicating any type of power of attorney, wills, or even correspondence with a lawyer. The nursing home business office recommended that Sally get an elder care attorney. The lawyer got the ball rolling by drafting powers of attorney that would give Sally the authority to make health and financial decisions for her parents. He prepared wills making Sally the executor of their estates. He then rushed them through the court in 48 hours. Jeff and Mary were moved to the long-term care facility where they shared a room. And it was determined that they’d have to pay out of pocket for their care. Sally was tasked with dealing with medical and nursing home personnel, attorneys, and real estate agents. Traveling from another state took an enormous amount of time away from her family. Eventually, Jeff and Mary’s home was sold and their assets were consolidated into one account holding a money market fund and two ETFs. The story doesn’t end there…

Fast-forward three more years…

Jeff dies peacefully while asleep. And Mary does the same six weeks later. Their brokerage account had been jointly held with right of survivorship. So when Jeff died, it went to Mary. And when Mary died, it was to be divided evenly amongst the three children. But when it came to splitting the account, one of the brothers pointed out that Sally had been getting compensated while handling their parents’ affairs. Therefore, she shouldn’t receive a full third. The other brother agreed. Sally objected, saying that she was only reimbursed for flights she had to take. Not for her time, lost wages, or other expenses she incurred. The brothers wouldn’t budge. Sally didn’t have the energy to fight them. So she agreed to pay half of the reimbursed travel expenses. And the family has been divided ever since. This is a hypothetical case, of course. The exact documents needed and court process would vary among states and one’s net worth. But I know plenty of REALLIFE stories that ended up even worse than this one. So to make sure something similar doesn’t happen to your family, below are four things to include in your “talk.”

First, ask about finances…

Preferably BEFORE anyone even retires, ask: • What investments do you have and how are they owned? • Do you have an emergency fund — money market account, saving account — that you can get at quickly? • Where are important documents kept? • Who is your attorney, accountant, insurance agent, and so on? • Do you have debt, such as a mortgage, auto loans, or credit card balances? • Is there a safe deposit box or anything else we need to know about?

Second, how is their health?

Are there chronic issues you’re not aware of? And what are their plans/wishes if their health deteriorates?

Third, assess options and formulate a plan.

What home health care options are available in their area? Is a long-term care insurance policy a practical solution? Are there other family members who would help with care? Consider all the possibilities and permutations as best you can.

Fourth, get any advice before it’s needed.

Regardless of your parents’ net worth and health, if they don’t’ have an attorney, find one who specializes in eldercare issues like advance directives. It’s a whole lot easier to work out who will do what if your parents can’t make critical decisions. While it’s not necessary easy or pleasant, helping family members or other people in your life prepare for retirement by having “the talk” might well be the most valuable thing you can possibly do.

Written by Nilus Mattive