And now I’m here to tell you that you need to talk about money with your siblings, too. It may be a pain, but here are three discussions you really need to have with them.
How are we going to take care of mom and dad?
This is the biggie.
Ideally, mom and dad should be a part of this discussion, but they might not be capable or willing to do so. Don’t let that stop you and your siblings from having a plan.
Why? Because chances are your parents don’t have a plan of their own.
A 2013 study conducted by Merrill Lynch in conjunction with Age Wave found 66 percent of older adults have done nothing to ensure they won’t have to move in with family should they be unable to live on their own.
That’s right. Nothing. Nada. Zip. And yet 70 percent of them will need long-term care at some point. So it’s essential that you and your siblings have a plan for what happens when mom and dad can no longer live alone. You should have an answer to all of the following:
- Will a sibling live with mom and dad to take care of them?
- Will the caretaker sibling be compensated?
- If living with a sibling isn’t a possibility, where will we move them?
- How much will that cost?
- Do mom and dad have long-term care insurance?
- If not, how will we pay for their care?
Figure out the answers in advance so you don’t find yourself in a crisis situation with emotions running high and everyone disagreeing about the best course of action.
Are you going to need help as you get older?
I have to admit it threw me for a loop to learn some people might expect their siblings to take care of them in old age. Then I had an eye-opening (or would that be ear-opening?) conversation with Jason Ting, a Merrill Lynch wealth-management adviser based in San Mateo, California.
“A third of my cases have a family member who thinks they will need to take care of a sibling,” Ting says.
In some cases, people may expect to help a sibling with a medical condition or one who is substantially older. On the flip side, there’s also the possibility that your sibling sees you as Mr. or Ms. Moneybags and expects you to bail them out in a bind.
The Merrill Lynch study mentioned above also found 56 percent of those age 50 and older say someone serves as the “family bank.” If you fall into that role, you may find yourself feeling used and pinched financially if your siblings keep returning to dip into your assets.
Rather than let resentment build, have a discussion upfront with your siblings. Sure, that’s not an easy subject to broach, but laying out expectations in advance is probably going to be beneficial for both of you.
How should we share vacation property/boat/family business?
A final money discussion to have with your siblings involves shared property. This could be something like a family business you inherit from parents or a boat or vacation house you decide to buy together.
“You have to be businesslike. You need basic contracts in place to protect everyone,” says Ting who, along with his brother, shares ownership of the financial firm started by their father.
Among other things, you’ll want to spell out:
- How will ownership of the item be split?
- How will use of the item be split?
- How will disagreements about the above be addressed (e.g. two siblings want to use the beach house on the same holiday)?
- How will purchase and maintenance costs be shared?
- What is the process for one sibling to relinquish their share of the item?
When it doubt, let a financial adviser break the ice
If you’re thinking this is all well and good but that bringing up these topics will be awkward, Ting says a financial adviser can be your best ally.
“Use a financial adviser as an excuse to have these discussions,” Ting says.
Of course, a financial adviser suggesting you use a financial adviser may sound a bit self-serving. And it may be, but it also makes sense. Telling your siblings that your adviser was hoping everyone could come in for a meeting to discuss mom and dad’s long-term care expenses can be a low pressure tactic to get everyone to the table. (Check out How to Find the Right Financial Adviser” for some tips.)
“The family meeting is a time to agree that everyone be open with their current situation,” Ting says. “Don’t hide information. I’ve seen that destroy families.”
That’s not to say everyone needs to come to the meeting with their bank ledgers and account balances. However, they do need to be honest about their financial means, and a third party may be able to tease out information that could otherwise go undisclosed. Then, you don’t end up in a situation in which you’ve agreed to put mom and dad in assisted living and later find out your brother is teetering on the brink of bankruptcy and can’t pay his share.
If you do decide to go it alone when it comes to these discussions, Ting says it’s essential to get to the root of any disagreements with a sibling. “The worst thing is to get into an argument when you don’t know why,” he says.
Rather than assume your sibling is being difficult, find out why they don’t agree with you. It could financial, philosophical or, yes, even personal. Once you know their reason, you can begin to either work toward a compromise or, when possible, walk away from the situation if needed.
Do you and your siblings discuss money? Share your experiences and tips in comments.