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Sep 4, 2018

How To Talk To Your Aging Parents About Estate Planning

by Darren Farwell

Darren FarwellCanadian seniors are living longer and more independently than ever before. In 2016, there were over three-quarters of a million (770,780) people aged 85 and older living in Canada. This segment of the population grew by 19.4% from 2011 to 2016, nearly four times the growth rate for the overall Canadian population over the same period of time. (Source: Statistics Canada)

Not only are older Canadians living longer, they are also holding significant wealth later in life. There are 2.5 million Canadians over the age of 75 with a combined total net worth of $900 billion. Over the next decade, their children—the baby boomers— will inherit approximately $750 billion, representing the largest intergenerational wealth transfer in Canadian history in such a short period of time.

That’s a lot of money exchanging hands from one generation to another. And yet, because estate planning is often considered a delicate and taboo subject, many families have not had crucial conversations about how that transfer of wealth will occur, or other estate and incapacity planning topics. In fact, only 43% of baby boomers polled have talked to their parents about end of life care, finances and estate planning.

As sensitive or difficult as these topics may appear to be, it’s vital for both elderly parents and their adult children to ensure there’s a well-conceived plan in place that addresses the details of eldercare, financial support and estate planning. Here are some ideas to start the conversation.

Talk about a friendís experience

Perhaps you have a friend whose parent(s) recently passed away where there wasn’t a plan in place. It may be beneficial for your parents to hear how difficult it was for your friend to finalize the distribution of their parents’ estate if they had to scramble to find important documents or had to deal with an out-of-date will.

Share your own experience

Share what steps you have taken in your own estate planning and invite your parents to offer their perspective. If you just purchased life insurance, ask your parents’ opinion as to whether they think it’s enough coverage or the right policy. Perhaps your financial advisor has asked you to do some retirement goal-setting. Ask your parents for advice about what they did when they were setting their own retirement plans. Based on their experience, invite them to share some of the top things you should consider. Hopefully, it will get them to share their actual plans with you.

Focus on your parentsí wishes, not your own

Keep in mind that it’s not about what you think is best; it’s about ensuring that you can fulfill your parents’ wishes. The quickest way to shut down a conversation is to start passing judgment on your parents’ plans or lack thereof. Try to avoid questions with the potential to put your parents on the defensive: “Why are you doing that?” “What about me?” The challenge with these types of questions is that they can be perceived as being judgmental and interrogative. Questions such as these could result in your parents stopping the conversation.

Bring the key decision-makers together

Ideally, all key family members should be mutually invested in the outcome of your parents’ estate plan. If you have siblings, ask for their input before you speak to Mom and Dad. The more you can engage and involve key members up front and make sure you’re all on the same page, the fewer chances there will be for family strife and disagreements later.

Listen more

You should spend more time listening than talking with your parents about their estate plan. Your goal is to encourage your parents to speak freely and honestly about their planning, or lack thereof. Try to avoid focusing too much on the numbers. Rather, focus on the over-riding principles. Do they want to stay in the family home or move to a small condo or retirement home? If there is a vacation property, do they want to keep it in the family? Are there any charities or causes they support where they might want to leave a significant contribution from their estate? As their care needs become more complex, do they have any ideas how they want them to be addressed? There are lots of details to consider, and it’s important to get as much input from your parents as possible to ensure their plan addresses their current and future needs.

Guiding principles for conversation

The most important things to do are to reserve judgment, be a great listener, and keep the lines of communication open. All your questions likely will not be answered during one conversation. Instead, you want to create a foundation for open, honest and ongoing conversations so you can help your parents finalize a concrete plan.

The costs of not talking

I’ve witnessed couples who have a solid financial plan in their twilight years and couples who don’t. The difference between the two can be dramatic. A poorly conceived or non-existent plan can tear families apart upon the death of the parents, as family members fight over heirlooms, or the family cottage because they can’t pay the property taxes. At very least, it can cause undue stress and confusion as you try to figure what your parent or parents might have wanted.

As difficult or awkward as it may be, it’s much better to have the conversation before your parent or parents suffer a major or fatal health crisis and they’re not able to advocate for themselves, leaving you and other family members scrambling to put everything in order. Just as your parents no doubt talked to you about money and finances when you were younger, it’s time to return the favour to ensure they are well prepared, well protected and can enjoy their twilight years confident that their care, wishes and legacy are in good hands.

 

Darren Farwell is a Senior Wealth Advisor and Director, Wealth Management with The Farwell Group at ScotiaMcLeod®, and an Insurance Advisor at Scotia Wealth Insurance Services Inc., both members of Scotia Wealth Management™. You can follow Darren on Twitter @DarrenSFarwell or visit his website at www.thefarwellgroup.com.

Scotia Wealth Management™ consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank®); The Bank of Nova Scotia Trust Company (Scotiatrust®); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod®, a division of Scotia Capital Inc.