adult children having financial discussion with senior retired mother and fatherFinances are possibly one of the most emotionally charged topics a family will ever have to discuss.

Guilt, obligation, embarrassment, hurt – these feelings are so often tied up with a person’s ideas about money that it’s the rare family who can converse on the subject without someone feeling upset.

This is, of course, why so many families forego these conversations altogether, much to their disadvantage. No matter how uncomfortable it makes a person feel, talking about finances is one of those essential conversations that families must have - especially when parents are retirement age or older, and facing potential scenarios, like the need for long-term care.

If you’ve avoided talking about your finances with your adult children, make a commitment to have that conversation soon. To help guide you, here are a few of the financial conversations that you must have with your adult children.

Will there be an inheritance? How will your estate be divided?

Tell your children about your estate and how it will be divided. Will your children be receiving an inheritance? Are there any possible debts that may need to be covered? Do you have a life insurance policy, and if so, who is the beneficiary? How are the benefits from that policy to be spent?

Letting your family members know what to expect after your death will go extremely far in ensuring that there are no ill feelings among your loved ones, and that your will doesn’t become the subject of a drawn-out, unpleasant legal battle. Answer any questions your children have, and be honest about your choices. This way, if a family member isn’t happy with something you’ve decided, you can at least discuss the matter and, hopefully, resolve it.

Are there funds available for medical care and/or long-term care?

One of the biggest financial burdens many seniors face is the cost of long-term care. 70% of all people turning 65 will need some form of long-term care during their lives - yet, many families haven’t planned sufficiently for this reality.

Be honest with your adult children about what funds are available to cover these costs, if they become a necessity. Do you have retirement money that you’ve earmarked for this purpose? Do you have long-term care insurance?

Long-term care costs can quickly reach into the hundreds of thousands of dollars. According to the Genworth Cost of Care Study, a private room in a nursing home can cost more than $97,000 per year. When you consider that some seniors require long-term care for 10 years or more, that cost can easily rise into the millions.

Many families struggle under this burden, ending up with strained relationships and extreme stress. Life settlements are one way to ease this, and they’re a possibility you should discuss with your children if it’s something you’re considering.

Who will have power of attorney?

You need to know whom you expect to act as your power of attorney, and your children should know as well - especially if it’s one of them.

The person with power of attorney could handle your affairs in case of a mental or physical incapacitation, like Alzheimer’s disease or a terminal illness. You can have two separate people act as power of attorney - one who handles medical and health issues, and another who handles financial ones.

This conversation is important because you want to ensure that the person whom you designate is ready and willing to serve in that stead. In addition, it will be much easier for them to step into that role if you can walk them through your finances or medical history before a catastrophic event occurs. This way, they can ask you any questions they have and become comfortable with the information they’ll need to take charge, should it become necessary.

Talking with your adult children about money may not be pleasant, but it doesn’t have to be an ordeal, either. For more on this topic, read our post “How to Talk About Your Estate Planning with Adult Children.”