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How to Talk to Your Adult Children About Your Finances. And Why It’s Important.

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As awkward and difficult as children may find it to discuss financial matters with their aging parents, it often is just as awkward and difficult for aging parents to talk about financial matters with their children. 

Some parents don’t like talking about their finances because they are afraid they won’t have enough for their own lifestyle and are embarrassed by it. Others don’t want their children to feel entitled or haven’t decided what to do with the money. Still others want to discuss it, but might not know how to get the conversation started. 

Whatever the reason for not having had these discussions, the pandemic has laid bare why financial professionals say it’s crucial to start having them before an emergency situation, sudden health event, or death occurs. 

“It’s important to talk about it so you can share your perspectives when you’re in control rather than when you’re out of control,” says Michael Liersch, head of advice and planning at Wells Fargo Wealth & Investment Management.

Here are some tips from experts to get going.

Meet to discuss the big-picture

Schedule a time to meet, in as relaxed a setting as possible. Determine ahead of time whether you want children’s spouses involved initially and define what you’re going to share and how you plan to do it. You might even want to invite an outside expert or experts such as an accountant, attorney, or wealth manager to facilitate the meeting. 

This meeting should be a high-level view of the family’s overall financial picture, discussing things like how the parents are supporting their current lifestyle and how they expect, generally, to distribute the resources they’ve accumulated. 

Depending on how much wealth there is, it could be appropriate for the parents to share stories on how the wealth was created and how they envision it being passed on to subsequent generations. This is the right time to discuss charitable giving goals, if any, the parents may have for the next generation.

Parents should do their best to answer questions that may come up, but also let children know they may not have all the answers—or be willing to share them—at this point, Liersch says.

Don’t start off with dollars and cents

At this first meeting, advisors don’t recommend parents share the granular details of their financials. That’s because the potential for “sticker shock” could make it difficult to absorb all the other information they’re trying to get across, says Indrika Arnold, a senior family wealth advisor with Colony Group.

She advises parents not to start the conversation with dollars and cents, even if the children are older and better prepared to handle it. “In initial communications with the next generation, regardless of age, sometimes other, more important messages get lost when numbers enter the conversation,” she says.  

These conversations aren’t just for the wealthy, says Joan Crain, a senior director with BNY Mellon Wealth Management. Adult children from families of more modest means also need to plan for an inheritance or the absence of one that they may have been counting on. 

Help children understand your reasoning 

Though they’re difficult and can be uncomfortable, these financial discussions are needed to lessen the likelihood of anger and long-lasting resentment. This is especially true if assets are going to be divided unevenly among siblings, say in the case of a special-needs child or family business. 

Crain offers the example of a couple whose child worked in the family business and was therefore expecting to be given full ownership. The parents, however, had other plans and wanted to give a sizable, passive ownership stake to a sibling.

The plans were aired at a family meeting, so when concerns were raised the parents had the opportunity to deliberate further and make modifications that satisfied both children. “If they had not had that conversation and they had only had that conversation when the parent had died…that could have led to litigation,” Crain says.

Plan for additional discussions

After the initial meetup is accomplished, schedule follow-up discussions where you can delve more deeply into what assets are available, how they are allocated, and what remains undecided, Liersch says. 

These discussions can be important to help adult children with things like estate planning and college planning. Retirement planning can also be more difficult if adult children don’t know at least an estimate of what they might expect to receive as an inheritance, especially if there’s significant wealth that children don’t know about, advisors say. 

Liersch says these additional meetings can help families avoid slipping back into a “state of inertia.”

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