(This is Part 2 in a 3-part series of Talking with Your Adult Children about Your Finances. You can read Part 1 here.)
In our previous post, we discussed the importance of speaking to your adult children about your personal finances. Once you’re ready to engage them in a meaningful discussion, you may wonder exactly what you should be sharing with them. The following are some ideas which can be tailored to individual preference and circumstance:
Start with the big picture: rather than diving straight into numbers and specific details, consider offering a summary of your current situation and your general intentions for the future. Perhaps you’re unsure if your resources will last your lifetime and you may require financial assistance from the kids in the future. Or you may have the resources to leave an inheritance or gift to charity. Either way, providing a general framework should pave the way for smoother dialogue on the details.
Decide whether to address items that could cause friction among siblings: for example, if your estate will be split unevenly among your children, communicating your intentions can avoid shock or hurt feelings. Similarly, if you plan to leave nothing to your children, letting them know will set appropriate expectations and give you a chance to share your reasoning.
Discuss expectations related to aging and care you may need in the future: if necessary, how would you prefer to receive care and what level of involvement do you expect from your children?
Make sure they know where to locate financial records and key documents including:
- Wills, Trust, Power of Attorney, Health Care Directive
- Insurance: Health, Long-Term Care, Life, Home, Auto
- Financial Accounts: prepare a list of accounts, household bills
- Deeds to real property
- Safe deposit box (be sure you’ve added a joint owner or put the box in the name of a revocable living trust so someone else has access to it)
- Passwords: creating a list of passwords to access various devices and financial accounts can prevent a lot of headaches down the road
Share contact information for your financial professionals: you may want to go a step further and introduce your children ahead of time to key contacts such as your Financial Advisor, Attorney, CPA, etc.
Who will be the Executor of your estate? Let children know who you plan to serve as your executor. If it will be one of your children, you should confirm that they are comfortable with your decision. If the executor role will be filled by someone other than one of your children, share these details so they understand your intentions.
Other Instructions & wishes: for example, if you have a particular vision for your funeral or memorial service, be sure to share this with your family. If there are other topics unique to your family such as a special needs child, a family business or heirlooms, discussing your hopes ahead of time will be helpful to all family members.
Are future conversations planned? Rather than trying to fit everything into one long “talk”, it probably makes sense to have multiple conversations. This should help to foster ongoing dialogue and allow time for parents and children to identify questions or concerns.
If the idea of starting this conversation seems overwhelming, you are not alone. With over 60 years of experience as financial advisors, we have helped many families just like yours with this process. If you need some help, we can facilitate a family meeting or simply serve as a sounding board for your ideas on next steps. Contact us to schedule a time to speak further about your specific situation.
Be sure to check back for Part 3 of this series where we’ll share tips on how to make your discussions more effective and successful.
Photo: Copyright 2018 RSW Publishing. All rights reserved. Distributed by Financial Media Exchange.