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Talking about money with one's parents is rarely an attractive encounter — but as millennials and Gen Zers find themselves with aging parents, these conversations are becoming important.
“The talk” about seniors' finances and end-of-life plans can be key to ensuring long-term wealth—especially since most wealth doesn't last more than three generations, according to Dr. Lazetta Braxton, founder of Lazetta & Associates and Real Wealth Coterie.
“If you don't have the benefit of having a lot of wealth that takes care of many generations … you have to disclose where everybody is, because if you don't know, the risk of anonymity can be catastrophic,” Braxton said. explained in Yahoo Finance's Decoding Retirement podcast (see video above or listen below).
Financial discussions have long been considered inappropriate, especially among older generations. This is why younger generations often find themselves responsible for starting these critical conversations.
Instead of talking about “the speech” as just one conversation, Braxton encouraged people to think of it as a “series of conversations.”
“It's not about parenting,” Braxton said. “It gives them a chance to be proud of what they've done, even if they haven't done all the things they wanted to do along the way.”
First, he recommended that the younger generations consider how to improve the environment before starting a conversation with their parents.
Often, details about an elder's power of attorney for health care and assets are not discussed until a major life event or crisis arises, which can make financial discussions difficult.
Instead, it's best to start these conversations with low stakes, Braxton says. He warned that approaching the conversation during a time of great stress “could set off a conversation for decades.”
It can also be helpful to have a third party, such as a financial planner, present when more details are discussed, as they can provide facts and act as a neutral player in the discussion, Braxton said. Having an expert be a part of these discussions can also help explain and define confusing terms that a person may not know when entering the discussion.
“It's very important in terms of building relationships… [to] know the trigger points and the easy points,” explained Braxton. “The issues… [shut] family member down and clear points… [give] comfort them and hope that it is safe to talk about these conversations.”
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