I'm a Financial Planner and an Only Child: Here's How to Navigate Your Parents' Older Years Solo (and Why I'd Recommend a Postnup)
If you're the only child of aging parents, decisions about their care, financial affairs and any inheritance may fall to you alone. These are the risks to be aware of and the conversations to have now.
I'm lucky to be close with my mom and dad and lucky they're both healthy and active in their 70s.
They've always taken great care of me (their only child), and I want to do the same for them as they get older. But I can only do that if I know, in advance, how they run their household and pay their bills, as well as what their concerns and wishes are.
If you're a "oneling" like me, you stand to inherit your parents’ homes and any wealth they've amassed. And your parents will want to ensure those things make it into your hands in the way they intended. That takes forethought, tact and a deft touch.
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Say 'I love you' with a prenup
Some of my clients won't even consider a prenuptial agreement. I don't force the issue, but I do advise them to at least do this: Save your retirement account statement from the month of your marriage. That's in case you ever need to determine what your financial situation looked like pre-marriage vs post-marriage.I consider it an act of love to go into marriage being honest about everything, including finances. The idea that talking about money is impolite has disadvantaged women for a long time.
To see what can happen when couples don't have these discussions — or when one spouse (most often, the wife) blindly trusts the other with all the family finances — read Belle Burden's New York Times-bestselling book, Strangers: A Memoir of a Marriage. I'm telling every married woman I know about it and encouraging them to read it.
My husband and I have a prenup, and neither one of us has plans to divorce.
But what if you find yourself heading for divorce without one?
If you married without a prenup, get a postnup
Yes, it's really a thing.
Sometimes couples draft postnups when they are giving their marriage a second chance after infidelity or a trial separation. Other times, new business partners draft them to protect the venture they are building together.
Whatevever your reason, start by finding documentation of what your financial situation looked like before you got married. A family law attorney can draft a simple postnup, a legally binding contract that outlines the division of assets and debts in the event of a divorce.
It should also make it clear that each spouse waives the right to contest any inheritance their spouse should receive.
Inherited wealth: Keep it separate
If you have wealth to pass down to a child or children — or you stand to inherit your parents' wealth —congratulations. Only about 22% of Baby Boomers plan to leave an inheritance to their children, according to Northwestern Mutual’s Planning & Progress Study.
For the same reason I'm pro-prenup — because life is uncertain — I'm an advocate for keeping any assets you inherit in your own name. When an inheritance goes into a joint account, it's hard to undo.
Most parents who leave wealth to their child or children do so out of love and concern for their offspring. No matter how much they love their son- or daughter-in-law, their intent is to ensure their child is taken care of. They don't want that money to be commingled.
Have the 'money talk' with your mom and dad
I don't mean you should ask, "Hey, are you gonna leave me any money when you die?" Instead, you might ask, "Have you thought about what would happen if you fell and broke your hip?"
Using personal anecdotes or news stories can ease you into the conversation. If you ask, "Did you read about Prince/Aretha Franklin/Sonny Bono not having a will?," it's an easy segue to, "Do you have a will?"
Prepare for the unexpected
While you're on the subject, consider asking your parents, "Can you walk me through how you manage your household so that if something happened, I could do it the way you do it?"That's so much gentler than: "I think you're slowing down and becoming forgetful. I may need to take over paying your bills."
It should go without saying that you need a will, but I'm often surprised by the people who don't have any estate planning documents — a will, a power of attorney or healthcare power of attorney.
That's one of the first questions I ask a new client, and if they don't have any of those, that's our first order of business.
There's even a service that can serve as a third-party power of attorney for folks without close next of kin or who are estranged from their family.
To move or age in place?
It's an important conversation to have with your folks by the time they're in their mid-70s.
If they don't discuss it with you, you might start by saying: "Have you thought about the benefits of a continuing care retirement community (CCRC)? And, oh, by the way, we should tour some because they all have waiting lists. Once you put your name on a list, it could be years before there's an opening."
CCRCs offer the full continuum of care from independent living to skilled care. But they require a significant lump sum to enter, and you have to be healthy enough to walk in. You can't wait until you need skilled care to go.
Not everyone wants that. My own parents plan to age in place. So, if one of them falls and breaks their hip, they'll go to rehab and come right back home. And when they do, they'll need caregivers to come to them while they're recuperating. Who will find, manage and pay them?
For that matter, who's going to make sure their house is clean and stocked with the right foods? In my own family, that'll be me. And it's a privilege to do it.
Plan ahead
When you consider what could sink a financial plan, long-term care is at the top of the list.
Every financial plan should include estimated long-term care costs along with estimates of any additional dollars you might need to spend on health care — for at-home caregivers, for instance.
Only children are likely candidates to be executors of their parents' estate. As soon as you know you have that responsibility, you should begin to get organized. If you're not, you can expect to spend about 540 hours, or nearly 23 days, on that task.
Don't let that happen.
There's a wonderful tool called Nokbox, or "Next of Kin" box. It was born of necessity; a woman invented it after settling her brother's estate.
It's a file folder organizer with a place to put everything — literally everything — someone would need in the event you’re incapacitated: Your vehicle titles, account numbers for utilities, social media passwords… It's incredible.
You can, of course, outsource executor duties. But there's a lot you can do on the front end to make it manageable.
Remember: You don't have to do any of this alone.
Assemble your team
Just as you might assemble a team when going through a divorce, it's great to bring experts together to help you and your parents navigate their golden years.
Start with an aging life care professional.
They can tell older people what resources they need if they choose to age in place, estimate costs for moving to a retirement community and even come to your parents' home to assess how safe it is.
Build a deep bench
My parents have each other as their power of attorney. I'm the backup, should both of them become ill or injured at the same time.
As an only child, my worst fear is something happening to me, because that would leave my parents vulnerable. So, my childhood best friend is my backup as their healthcare power of attorney. She's known them since she was 3. Having her on our team has given all of us great confidence.
And that's really what all this advance planning is about — confidence for you, your parents, your spouse and kids. It all starts with initiating a conversation.
If your parents haven't had "the talk" with you yet, bring it up to them. I'll bet they'll thank you. And your future self will thank you, too.
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