American families are not prepared to discuss estate planning, according to a new study from Fidelity Investments. The Family & Finance Study found that many families disagree on roles as parents age and financial conversations can be difficult.
While the study found that most adult children (70%) are happy to take care of their parents financially and physically, there are areas of disconnect that families disagree on.
According to the study, 92% of parents expected one of their children to take on the role of executor of the estate. Of these parents, 55% expect the eldest child to be the executor. One in four children, about 27%, who would fit this role did not know it was expected of them.
About 69% of parents believed they have had frank conversations with their children on these important matters, but 52% of children disagreed. The majority of parents (69%) are expecting their children to help them manage their finances, but 36% of children did not know of this expectation.
“These discrepancies highlight the fact that many families need to do a better job of being on the same page when it comes to financial planning,” says John Sweeney, Fidelity’s executive vice president of Retirement and Investing Strategies. “There are real emotional and financial consequences when family conversations don’t happen or lack sufficient depth.”
Sweeney notes that “every family will face issues related to aging,” and cites an urgency for parents and children to begin discussing roles and responsibilities before health starts to decline.
Disagreements on the timing of estate planning conversations is preventing families from having frank discussions. Only 33% of children and parents agreed on when it was appropriate to have these conversations.
Many families have yet to have these important discussions (38% of parents and 43% of children).
“No matter how much wealth a family has accumulated, discussions about estate planning are essential to ensure the wishes of parents are carried out,” Chris McDermott says, Fidelity’s senior vice president of Private Wealth Management.
One-third of parents and children believed these conversations should occur after retirement, but Fidelity recommends planning before retirement when finances and health may become an issue.
Three out of ten surveyed families also disagreed that children would know where to find important family documents, like power of attorney, wills and health care proxies.
Fidelity recommends defining family roles in advance, ensuring all family members know where important documents are, and for children to make commitments to have follow-up conversations regarding estate plans.