May 2015

MONEY LESSONS FROM THREE FAMILIES: Stories to help you navigate tough conversations about money, health, and estate planning.

Author: Fidelity

One family found an uncovered box of cash with $70,000 in small bills under grandma’s sofa. Another family was devastated by the news that the financial decision maker was diagnosed with a brain tumor. Yet another couple found $27,000 in paper bags and pockets of clothing in the attic when one spouse’s father died.

How do you adjust when life throws a curveball? How can you prepare for something that you aren’t expecting? We interviewed three families to find the common threads that enabled them to pick up the pieces and move on. In their own words: They planned early. They put structure into their family conversations about money and health. They sought outside help when needed. And they learned from their mistakes.

“You’re never too young to start,” said Duane McCarthy, whose mother-in-law had the stash of cash under her sofa. “You really need to plan today, as we don’t know what tomorrow holds.”

Start the conversation
Money and health are two of the most difficult subjects for families to talk about. In fact, according to Fidelity’s 2014 Intra-Family Generational Finance study, 40 percent of parents reported they did not have detailed conversations with family members about covering living expenses in retirement; 43 percent said they didn’t have them about health care and eldercare expenses, and 31 percent said they failed to talk in detail about wills and estate planning.

Start the family conversation about money today, so your family is prepared.
“It’s absolutely critical that families come together to sort through important matters related to such things as retirement preparedness, caregiving responsibilities, and estate planning,” said John Sweeney, executive vice president of retirement and investing strategies at Fidelity.

So how do you get the conversation going? Different families have different ways of breaking the ice. One family liked to open the discussion with a book that one of them was reading; others used games to start the conversation.

Jackie Parker, whose husband Jim died of cancer a few years ago, remembers Jim putting himself in the center of a family circle and telling them all to ask whatever was on their mind, regardless of how sensitive the topic was. Jim was the financial decision maker of the family.

“It gets easier as everyone becomes more comfortable,” Parker said. “So start talking, not just about finances; talk about everything. When raising our children, nothing was ever off the table. That’s how it should be.”

Get your ducks in a row
Craig Schroeder had always been a planner, a saver, and an investor, and he made it a point to instill his money skills and values in his children. So when Craig died of a brain tumor, his family was well-prepared. Craig’s motto: “Get your ducks in a row.”

That sense of financial responsibility served his family well. Said Ben, Craig’s older son, “I’ve always lived below my means, especially right out of college. I’ve learned how to spend, manage, and budget my money, so I’m light-years ahead of most of my friends.”

Jim Parker was a planner, too. Before he died, he wanted to make sure his family could manage his portfolio after he passed. Realizing that Jackie wasn’t the investor that he was, he reached out to Ann Marie, a Fidelity representative, to help guide Jackie through the necessary steps that required immediate attention, like applying for Social Security and changing accounts into her name.

Involve the family early
The McCarthys made a point of engaging their family in the day-to-day management of the family’s money. Dorothy McCarthy says they created a will early on so there would be provisions for the children if something happened to them. For the McCarthys, it was also important to let the children know that they wouldn’t gain access to their inheritance until after age 30, when they’d be old enough to manage it wisely. (Read Viewpoints: An all-in-one wealth transfer checklist, fidelity.com/viewpoints/personal-finance/wealth-transfer-checklist.)

Make sure your family knows where important documents, contacts, and account statements are kept. Many families today use secure virtual safes, including FidSafe®2 to store copies of important documents and other information such as passwords, financial statements and wills.

The McCarthys also let their children know where the keys to their safety deposit box were kept, the location of the family’s cemetery plots, and the location of estate plan documents, including the trusts they set up with the children as beneficiaries. They also made sure that their daughter, Kristie, was comfortable taking on the added responsibilities that come with account access and trading authorizations.

Know what’s important to you and your family
In the end, make sure your conversations, your documents, and your money all convey your beliefs and core values.

“Mom went through the Depression, which left her scared, so she was very frugal—and a good manager of money,” Duane McCarthy said. That mindset has spilled over into subsequent generations. The McCarthys have always been savers, and careful not to overspend.

Most of all, all families agreed on one thing: You have to start talking while you still have time. Jackie Parker said, “Our family circle time really got the ball rolling as far as talking about plans and goals—and how to reach them.” 

Lessons Learned
- Start early by educating your children about saving, earning and investing.
- Have open conversations regarding health and finances early and often.
- Find a financial professional and estate planning attorney you trust to help you put a plan in place.
- List assets, liabilities, account numbers, and where they are located.
- Discuss problems of aging and eventual need for assistance.
- Make sure to address incapacity, advanced medical directives and death.

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