Essential conversations about family wealth


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How confident are you about your family’s finances? How often do you discuss money with your loved ones? According to the Family Wealth Checkup study by Ameriprise Financial, there’s a correlation between financial confidence and communication.

While many families are discussing financial issues, they tend to shy away from diving deep into topics like inheritance and estate planning, leaving some family members with unrealistic expectations.

Here are some tips to help you discuss money matters with your family.

• Don’t wait for tragedy to bring up finances. Family conversations about finances lay the foundation for a more secure financial future for the people closest to you. Nine in 10 adult children say a life-altering event triggered a financial talk with their parents. It’s a good idea to have these conversations when all the important players in your estate plan can participate and communicate their wishes or questions. With time on your side, you can cover topics thoroughly and have time to get the proper documents in place, if you haven’t already.

• Although estate planning can be a tough and emotional topic to initiate, families that have talked about it say the discussion went much smoother than anticipated. Families said their conversations were straightforward and relaxed as opposed to awkward or difficult — even more motivation to have the talk with your loved ones.

• Make the conversation a priority and schedule a time to chat. Complex estates may require multiple discussions, so schedule a date to continue the conversation if needed. After your initial conversations, keep your family members up-to-date about changes that could affect your estate, such as establishing a living will or cashing in an annuity.

• Share your agenda ahead of time so that your family can prepare for the conversation. Consider starting the conversation by sharing your financial goals and values, and telling your family why these discussions are important to you. Other topics on the agenda may include managing current finances including any debt, healthcare costs and legacy planning.

• Manage expectations. You don’t have to divulge the exact value of your estate or the amount of money in your accounts, but it’s important to disclose enough details so that your family can set appropriate expectations. If part of your legacy plan includes leaving an inheritance, consider letting your family know whether it’s an amount large enough to help fund your grandchildren’s education or maybe it’s closer to a down payment on a car. Most people plan to leave an inheritance, but only 21 percent of parents have told their kids how much they can expect to receive.

• Create or update your estate plan. Your estate encompasses anything you own, such as real estate, cars, life insurance, financial accounts including your retirement plans, and personal possessions. Creating a plan for what happens to these assets and accounts is important no matter the size of your estate.

• If you already have an estate plan in place, revisit your will or trust, and update beneficiaries to various accounts and assets to mirror the blueprint you’ve shared with family members. Consider also providing instructions in a health care directive on what you want your family to do in the event that you cannot act on your own behalf. Clearly documenting your wishes can make difficult circumstances easier for everyone involved.

• Tell loved ones where to find important documents. Prevent headaches that can slow down the settlement of your estate by providing instructions about where you’ve stored the safety deposit key, bank accounts, stock certificates and other pertinent items, including digital assets. Also, ensure that your family has the contact information for the professionals (e.g. lawyer, estate planner, tax or financial advisor) who are helping you prepare or manage your estate.

• If you experience conflict in your family discussions or want some help navigating difficult topics, consider working with a neutral third party, such as a financial advisor who can help your family understand your collective financial picture and transition wealth from one generation to the next.

Ongoing dialogue about estate topics with family members could bring you closer together and pave the way for a smooth transfer of wealth, when the day comes.

Bob Bonfiglio, a private wealth advisor and managing director with Rise Private Wealth Management, Bedford, can be contacted at 603-606-4255 or at bobbonfiglio.com.

 

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