A new study shows that almost two-thirds of parents and adult children are out of sync about when they should start talking about legacy planning, elder care planning and estate planning.
The 2014 Intra-Family Generational Finance Study from Fidelity Investments shows that both parents (61%) and adult children (57%) report that they are more comfortable talking to a financial advisor rather than to each other about these issues.
The study shows that parents prefer to delay the conversation until after retirement and the children are concerned about discussing these important issues before the parents retire or experience some health issue. This is where a commitment to legacy planning can help provide a structure to review all these issues as part of a family planning process before a crisis develops.
The study also shows that lack of communication creates some misunderstandings. For example:
• Adult children underestimate the value of the parent's estate by more than $300,000 on average;
• Adult children expect to provide care as the parents age. Nearly half of the adult children (43%) say they expect that they or a sibling will care for mom or dad when the time comes. But only 6% of parents expect the kids to provide their care; and
• More than half (56%) of adult children think their parents often worry about financial security, but only 23% of parents report this concern.
An important part of the legacy planning process is planning for income for mother and dad as they age and can no longer participate in the family business and ultimately the cost of long-term health care, should they need it. These can be significant challenges and parents and children don't see them alike.
Many parents don't talk in detail about how they will meet living expenses during retirement. While 60% report a detailed conversation with their family but 15% report no conversation at all.
They are no more talkative about health care and elder care expenses, with 57% of parents indicating a detailed conversation with family and another 20% report no conversation at all.
Most families talk about wills and estate plans but nearly a third failed to have a detailed conversation and 10% have had NO conversation at all on the subject.
The entire subject is difficult for the entire family. Nobody wants to face aging or mortality. The kids often are worried about seeming to be greedy for an inheritance. There is often a lot of baggage around these conversations.
This is where the trusted advisor can play a role.
The opinions of Rich Dunn are not necessarily those of Farm Futures or the Penton Farm Progress Group.