As families accumulate wealth, the complexities of managing that wealth—and ensuring it is preserved and transferred according to their wishes—become more challenging.
For many, the responsibility of helping aging parents navigate financial decisions is an essential part of safeguarding their legacy and maintaining financial security.
Conversations about finances and end-of-life planning can be delicate and are often avoided altogether. For high-net-worth families, addressing these matters early is critical. With complex investments, real estate holdings and tax implications to consider, understanding these key financial details ahead of time is key to preventing issues later, keeping your family's financial future secure.
This article helps families in this situation to approach these conversations thoughtfully and strategically. If you're planning a financial conversation with a loved one, our “Helping Aging Loved Ones Manage & Protect Their Finances Checklist” is a concise, step-by-step guide to assist in the process.
Discussing finances with your parents can feel uncomfortable, especially when the conversation touches on mortality and legacy. Many people are private about their wealth and may hesitate to share details about their financial situation, even with close family members. Creating a thoughtful and respectful environment can make these conversations easier.
Start by expressing your genuine desire to protect their interests and ensure their wishes are honored. Approach the conversation with care, but also with the clarity and directness that complex financial matters require.
Here are tips for navigating the discussion:
• Choose the Right Time and Place: Pick a calm, private setting without distractions to help your parents feel more at ease.
• Be Patient and Respectful: Give them time to process the questions and respond thoughtfully. Understand that they may have questions for you, too, so you need to be prepared to answer them.
• Be Gentle but Direct: Clarity is key. Approach the conversation with tact, but don’t avoid the difficult questions.
• Involve Key Family Members: If siblings or other beneficiaries will be involved in managing the estate, include them in these early conversations to help prevent misunderstandings or disagreements later.
Holding successful family meetings is one foundation on which wealth management and wealth transfer plans will be built. Learn more from our recent article, How to Hold a Family Wealth Management Meeting & Create a Family Mission Statement.
While every family’s financial situation is unique, there are eight key questions you should ask to understand your parents’ financial standing and ensure a smooth transition of their wealth.
1. Who Manages Your Finances?
Knowing who oversees your parents’ finances is vital. Whether it’s a financial advisor, family member, or trusted friend, understanding the roles and responsibilities is crucial—especially for families with complex portfolios.
Ask your parents:
• Who oversees their day-to-day finances (e.g., checking and savings accounts, bills, and investments)?
• Do they work with a wealth management professional or investment advisor for their long-term investments, retirement accounts, and other assets?
• Are there fiduciaries or individuals with power-of-attorney authorized to act on their behalf in the event they become incapacitated?
Knowing the key players ensures you can step in or coordinate with professionals when necessary. It may be wise for you to have your parents introduce you to their financial advisors so you can step in and assume responsibility at any time, if needed.
2. Has a Will or Estate Plan Been Created?
A comprehensive estate plan goes beyond a will and includes trusts, tax strategies and succession plans.
Consider asking your parents:
• Do they have an updated will or estate plan?
• Do they have an updated Healthcare Power of Attorney or Medical Power of Attorney?
• Do they have a Living Will and Advance Directives?
• Where are these documents stored, and who has access?
• Are there specific bequests or requests regarding charitable giving, trusts or family businesses?
Encourage your parents to consult with an estate planning attorney to ensure their documents reflect their current wishes and align with generational wealth transfer goals. You may want to propose that you participate in those conversations to ensure your parents’ wishes are documented appropriately and thoroughly.
3. Who is the Executor for the Estate?
An executor handles the distribution of assets, payment of debts and settlement of taxes according to your parents’ will. Choosing the right person—often a trusted advisor or experienced professional—is essential.
You need to understand:
• Who is named as the executor, and is this person still willing and able to serve?
• Have the executor's responsibilities been clearly communicated?
• Is there an alternate executor in place if the primary choice is unable to serve?
For complex estates, working with a professional executor may be more effective than assigning the role to a family member. For more insights on this topic, read our recent article, 7 Mistakes to Avoid When Choosing an Executor or Trustee.
4. Where Are Financial Accounts Held?
Affluent families may have accounts spread across various institutions—banks, brokerage firms, retirement plans, insurance companies, etc. Knowing the location of these accounts is vital for understanding your parents' financial situation and managing their assets if necessary.
Ask your parents:
• Where are all financial accounts held?
• Are there private equity holdings or alternative investments involved?
• How can you and/or the executor access these accounts if necessary?
If your parents maintain accounts with various financial institutions, consider whether it would be necessary and appropriate to consolidate some or all of these accounts to simplify oversight and management.
5. Are There Any Safe-Deposit Boxes , Secured Assets or Digital Assets?
Physical assets like jewelry, art, and important documents may be stored in secure locations.
Remember to ask:
• Do your parents have a safe-deposit box or private vault and if so, where?
• Where is the key or access code kept?
• What documents or items are stored, and who does or should have access?
• Where are important usernames and passwords stored for social media, financial institutions and other online sites?
Ensure these assets are properly documented in the estate plan. Knowing the location and how to access these secured assets will be helpful when the time comes to settle their affairs.
6. Are There Life Insurance Policies in Place?
Life insurance plays a vital role in liquidity planning, debt repayment and wealth transfer.
Consider asking:
• What life insurance policies are in place, where are they stored, and who are the beneficiaries?
• Are there additional policies related to long-term care or disability or other insurance coverage that you should know about?
7. Where Are Tax Records and Important Financial Documents Stored?
Proper tax documentation is crucial for protecting wealth and avoiding penalties.
Ask your parents:
• Do they have a tax accountant and if so, what is the contact information?
• Where are tax returns, records of charitable donations, and investment statements retained?
• Are there any specific tax strategies in place to reduce estate tax liability?
• Have they documented any gifting plans or charitable considerations?
Easy access to these documents may help simplify estate settlement when the time comes.
8. How Will Funeral Expenses and End-of-Life Expenses Be Covered?
Planning for funeral expenses helps reduce stress and ensures your parents’ final wishes are honored.
Remember to ask:
• Have funeral arrangements been pre-arranged or pre-paid?
• If not, how will funeral and burial expenses be covered?
Having clarity on these details can help you respect and carry out your parents’ final wishes. All of this is outlined in our "Helping Aging Loved Ones Manage & Protect Their Finances Checklist
Difficult conversations focusing on wealth and mortality are essential for ensuring a smooth transition of wealth and protection of your family’s legacy.
At Hancock Whitney, we’re here to help. We specialize in guiding families through these pivotal moments. Our advisors can help you navigate estate planning, wealth preservation and legacy transfer strategies.
Remember, don’t wait until it’s too late to ask the hard questions. Taking the time now will protect your family’s financial future and provide peace of mind for everyone involved.