Essential Conversations About Family Wealth

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 ten 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 who 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. Rather than hoping a conversation will happen after dinner, let each family member know ahead of time that you want to talk. 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% of parents have told their kids how much they can expect to receive.

Create or update your estate plan. Pair your conversations with a comprehensive estate plan to prevent rifts that can happen when financial wishes are not clearly documented. 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 healthcare 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. Families who are kept in the dark could face challenges if something unplanned happens and they are left to pick up the financial pieces. 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.

Work with a financial professional. 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. A financial professional 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.

The Family Wealth Checkup study was created by Ameriprise Financial, Inc. and conducted online by Artemis Strategy Group November 23—December 15, 2016 among 2,700 U.S. adults between the ages of 25-70 with at least $25,000 in investable assets.

Rocco A. Carriero, MBA, CRPC, is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Southampton, NY. He specializes in fee-based financial planning and asset management strategies and has been in practice for 19 years. To contact him: 631-283-8482, 1673 County Road 39, Southampton, NY 11968 or roccocarriero.com. Advisor is licensed/registered to do business with U.S. residents only in the states of NY, NJ, TX, MA, PA, NC, NH, UT, NV, CA, NM, WA, VT, MS, MD, RI, FL, MO, SC, GA, MN, CT, AZ.

Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser.

Ameriprise Financial Services, Inc. Member FINRA and SIPC.

© 2017 Ameriprise Financial, Inc. All rights reserved.

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