Your Estate Plan and Your Children: What to Say and When

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Your Estate Plan and Your Children: What to Say and When

We know conversations about finances and estate planning have great potential to be an “elephant in the room” for many of us, especially when it comes to conversations between aging adults and their grown children. Data from a TIAA study in 2017 showed between 75%-85% of parents and children consider financial discussions very important, but only 11% of parents and 37% of adult children were likely to initiate talk about money and estate matters.

And when families do talk about money matters? Only 9% of parents felt their conversation was very detailed, perhaps due to another statistic: 90% of parents and 70% of children said conversations about their parents’ finances and future plans happened spontaneously. However, those parents and grown children who interacted regularly and purposefully with each other to talk about their plans and wishes reported overall high levels of satisfaction about doing so.

We recommend three steps you can take to address the potential “elephant in the room”:

Step 1: Reflect

Resolve to begin detailed conversations with your children to address your financial well-being and estate plan. You should also consider what issues related to money may be challenging for you to express, as well as what kinds of responses may be difficult to handle.

It takes courage to deal with the variety of approaches, attitudes and expectations each person holds about money. Before you engage with your children, spend time thinking about your approach to and experiences with savings, spending and investing; understand how that may influence the tone and direction of your conversations.

Step 2: Prepare

Plan to talk to your children when there is ample time to calmly discuss your estate plan and any issues that may arise. Practice what you want to share, by writing it down and rehearsing. Also, be willing to ask your children even the most seemingly obvious finance-related questions. We’ve developed this list of potential questions; begin with easier topics and progress to more complex ones:

  • What have you learned from my/our example of handling finances?
  • Do you know what I/we want to do in retirement?
  • Are you interested in knowing what’s in my/our will?
  • Do you know what I/we plan to do with our property?
  • Do you know about our philanthropic goals and what we support?
  • Do you know where to find pertinent information for addressing any requirements of you?
  • Are you interested in meeting my/our financial advisor to learn more about our plans?
  • Are you aware of the things I/we pay for, today?
  • Would you be able to take those costs on if I/we weren’t able to support them anymore?
  • Do you think you’ll need my/our financial help down the road, whether it’s for smaller monthly expenses, or larger ones such as a down payment?
  • Would it matter to you if I/we used our savings for travel and leisure instead of helping with your expenses?
  • If I/we needed help paying for long-term care down the road, would you consider helping cover medical bills?

Step 3: Schedule

Agree on the time, financial topic, location and length of your discussion to help all parties remain relaxed and comfortable throughout the conversation. As a family, commit to continuing your conversations about money and estate planning — for instance, you could develop a schedule for ongoing dialogue.

During scheduled conversations with your children, revisit your financial situation and, if necessary, bring up “next topics” related to your estate plan and investments. You may also consider working with a financial advisor who can assist with keeping your conversations about finances focused and productive.

Because many of us only talk about money when we have to, money conversations usually happen in the heat of the moment or when there is pressure to make a decision. Knowing when, where and with whom you will be talking about finances, and being intentional about the conversation topic and scope, can significantly improve both short- and long-term outcomes when it comes to the parent/child dynamic.

Remember, even the smallest of elephants grows larger with time — and trying to ignore it does not help move it out of the room. Contact The Humphreys Group for further advice on how you can best talk with your children about money matters.