The money talk most of us avoid - and the steep price we pay as a result with author Cameron Huddleston (ENCORE )
Cameron Huddleston wrote her new book “Mom and Dad, We Need to Talk. How to Have Essential Conversations With Your Parents About Their Finances” when she found herself confronted with huge issues after not talking to her mom about her money- which she shares on the podcast. The book hits on a huge issue impacting all generations and all income levels.
Cameron's money story:
Cameron Huddleston:
Yes. I had moved from Washington DC where I was working for Kiplingers Personal Finance magazine. I had moved to my home state of Kentucky, actually across the street from my mom. I said to her, "Mom, I think you need to look into long-term care insurance." She and my father had divorced years before that, and she was living on her own. I knew that if she had any long-term care needs, it would be helpful to have long-term care insurance to help cover those costs. She took my advice-
Bobbi Rebell:
Wait, for people that don't know long-term care insurance is specifically to cover things like a nursing home that you would live in. That kind of thing.
“A big benefit of having a third party involved with these conversations is because your parents might be reluctant to talk to you but they are going to listen to the advice of someone else.”
Cameron Huddleston:
Yes, assisted living, memory care, and in case you don't know this, Medicare does not cover those costs.
Bobbi Rebell:
What's a typical cost of that if somebody or their parents end up having to pay that out of pocket?
Cameron Huddleston:
The average cost of assisted living is about $4,500 a month. That's average. A nursing home is 80-$90,000 a year.
Bobbi Rebell:
Okay, so you moved back home to across the street from your mom, and you're learning about her situation?
Cameron Huddleston:
Yes. I asked her to check in a long-term care insurance. She took my advice. She met with an insurance agent. Unfortunately, she did not qualify for coverage, because she had another preexisting condition that made her too high risk. At that point I should have said, "Okay mom, you can't get long-term care insurance coverage. Let's look at your financial assets, figure out where you stand, and figure out how we would pay for this care if you needed it."
I can look back and say, that's what I should've said, but I didn't. I didn't even think about it at all. Say being what it is, a few years later, she started having trouble with her memory. At that point, I knew I needed to act quickly and talk to her, but because I was already facing a crisis, if I wanted to start talking to her about money, I would have to explain to her why, "Mom, we need to talk about your finances, because I can see you're having trouble with your memory."
I didn't want to have to be the one to tell her that. I didn't care about talking to her about money. That didn't feel like a taboo topic to me. I didn't want to tell her that I thought she was losing her memory. Eventually, with the help of a doctor actually, I got her doctor to suggest that she get tested for dementia, and he did.
During that process I said, "Mom, I think we need to go meet with your attorney and get all your legal documents updated. Because the thing is you have to be competent, mentally competent to sign a will or a living trust, a power of attorney document, and an advanced healthcare directive. If you are no longer competent, you cannot sign those documents."
Then if you get into a situation like my mother did where she is no longer able to make financial and healthcare decisions on her own, if she had not named me power of attorney and healthcare power of attorney, I would have had to go to court, basically put her on trial to prove that she was no longer competent, spent thousands of dollars to get conservatorship for her. I act too quickly. I knew I had to do this. She was still competent enough. I dodged a bullet, but then I had to figure out her finances while she was already forgetting things, and it was so difficult.
Bobbi Rebell:
Right. So how did that work? What did you find?
Cameron Huddleston:
I had to approach it very carefully. I didn't want to look like I was going in and taking over, especially in the early stages of her dementia. I didn't want her to feel like she was losing all of her independence. So I just did things little by little.
One of the benefits of meeting with the attorney was that she suggested that we go to the bank, and put me on her account as her representative payee. That's certainly a big benefit of having a third-party involved with these conversations is because your parents might be reluctant to talk to you, but they're going to listen to the advice of someone else. So the attorney said go to the bank. We took her advice, and then that sort of opened the door to having some more conversations about what role I was going to have to play going forward.
She had all this cash just sitting in her bank account. Fortunately, she had not opened an online account. She was so old fashioned, she never used debit card. She used checks. So I was able to go online and set-up online banking for her and monitor her bank account, because one of the issues that she was having was writing checks to every organization that would send her something in the mail, like organization she had no ties to.
So, I had to make sure she wasn't just spending all her money writing these charitable contribution checks.
Bobbi Rebell:
Which is something that happens to a lot of seniors.
Cameron Huddleston:
Oh yeah, it's a big problem. Then you've got to worry about scammers and stuff. I decided to take that money and put it into an annuity. Not that you or I would necessarily recommend that everyone get an annuity, but I knew that it would be a safe place to put her money. It would earn some interest, hands off for several years, and then use it down the road when I needed it to pay for her care.
Cameron’s money lesson:
Cameron Huddleston:
The lesson is please don't wait to have these conversations with your parents. A lot of people I talk to and hear from say, "Well, I don't need to have this conversation yet. We're not there yet. Mom and dad are still healthy." That is exactly the time you need to have it. You need to have the conversations when your parents are healthy. There's not a financial crisis, there's not a health crisis, because then everyone is entirely competent. Your parents know what assets they have, what they don't have, what legal documents they have.
“You need to have the conversations when your parents are healthy. There is not a financial crisis. There is not a health crisis. Because then everyone is entirely competent.”
You have time to get those legal documents if they don't have them. Emotions are not running high. There's so many more options available to you. If a crisis does arise, you can make a plan for how they are going to age comfortably. You can't do that if there's already a crisis.
Cameron's everyday money tip:
Cameron Huddleston:
I think I have a pretty good tip. It's something that I have done myself. I set-up alerts with my credit card account. It's so easy. You just log onto your account online. There's usually most credit card companies will have a place where you can click on alerts and notifications. I set it up to get alerts every time my credit card is used. The benefit of this is that it alerts you to fraud, which has happened to me.
“If your parents are counting on your to be their caregiver.. wouldn’t you rather know this now .. because you might have to prepare your own finances”
It was really an unfortunate situation. I was at a visitation for a family member who had died, and my phone, it was like a little ding from the message. I looked at it and it said my credit card had been used. Then I got another ding that it was used again and I was like, "Wait a second, I did not make these charges." I got on the phone, called my credit card company and I said, "I think my credit card number has been stolen. I want you to flag these transactions as fraud and I want to cancel my card." Thank goodness for the alerts. I mean, I knew right away that there was something fishy.
In My Take you will learn:
Financial Grownup tip number one:
Make sure proactive decisions are being made about insurance, not just for yourself and your immediate family, but also for anyone who is what I would call stakeholders in your family financial ecosystem. So everyone whose finances could impact yours, only you can decide if you need and at what amount you may need. For example, life insurance, long-term care insurance, healthcare insurance and so on.
Make sure those decisions are being made for everyone that is tied to you financially, because the decisions made or not made can and in many cases, will impact your life. So make sure that the people you care about have the information and that they're making decisions. Because obviously as we always say, not making a decision is actually making a decision. It's just not one that you are aware of all the time.
Financial Grownup tip number two:
If you don't feel comfortable having these conversations now, this is what you need to do. Go through in your mind and play out how things could go if you don't get this done, if you don't have the conversations, what happens? It may give you some motivation.
Bobbi Rebell:
Read Cameron's book for example of the reality of how this goes. For her, it was not perfect but she dodged a bullet as she says, but she gives some examples that will certainly motivate you because things can go very bad, very fast, very unexpectedly and with a very high price tag. Even what seems like the most basic things can be huge stresses at the worst time. As an example, a relative of mine recently passed, and when we visited her husband a few days later, rather than focusing on his own emotional healing, he was actually stressed out just trying to figure out her passwords. I mean, that's terrible.
Episode Links:
Blinkist - The app I’m loving right now. Please use our link to support the show and get a free trial.
Cameron’s website - www.CameronHuddleston.com
Cameron’s Book - Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances
Follow Cameron!
Facebook - @CameronHuddlestonMoneyExpert
Twitter - @CHLebedinsky
LinkedIn