You may have never spoken with your adult children about money – how much you make, how much you have, how much you spend. However, the risks of avoiding the topic often substantially outweigh the benefits. Allowing your children to be caught unaware, unable to access funds for you when you need them only causes more strain when experiencing a difficult circumstance like a prolonged illness or accident.
We all have good reasons for lack of transparency like fear of misuse by an immature or troubled child, complicated family structure, or a need for privacy. Ultimately, the goal is not necessarily to share everything but only what is prudent to relieve some of the stress and negative consequences at a challenging time of life. The process is often most successful in stages. There is no road map for revealing finances to children, but here are some suggestions to help get organized and begin the process:
- First, make a comprehensive list of all your financial accounts, policies, advisors, beneficiaries, and legal documents. Clients of Stonebridge Financial Planning Group, LLC® have access to our recently updated Financial Life Journal that contains a fairly exhaustive list of information your children, executors or health care advocates may need. You may not want to share everything in it with your children right now, but you will want to have all the information in one place. After you have completed the list, make sure your executor knows exactly where the printed version is or has access to the electronic version.
- The previous item assumes that your end of life documents are complete and recent (within the past 5 years). Keep a copy of all documents with your Financial Life Journal, whether in paper or digital format. If you have not completed these documents, we can help with some recommendations for family and estate attorneys. Now is a great time to get them completed as attorney offices are still open and meeting clients remotely.
When you are ready, share the following in stages:
- Let your children know if there are any gaps in your financial plan. This should be a priority. They have a right to know if you may end up needing their assistance in some area of your financial life. This gives them time to prepare, make plans, and help find resources.
- Talk about all insurance policies and long-term care plans and where to access information regarding each of them.
- Big numbers can wait. A number that seems like it is just enough to cover 25 years of retirement may seem like a windfall to a young adult in their 20’s or 30’s. Instead, share that you have enough to be independent, you have plans for long-term care, etc. Actual numbers can and should be shared as you age, especially into your 70’s and 80’s.
- Introduce your family to your financial advisor in order to provide opportunities for your children to discuss plans, concerns and build confidence in your future success. It also establishes a relationship before the difficult times arrive. This meeting need not be about numbers until much later but should be about general plans.
- Along those lines, have a family meeting with everyone present, especially if there is some disparity in responsibility or distribution of your estate. It is a great time to reassure your family that you love all of them equally but made choices like executor or power-of-attorney based on training or location.
Ultimately, sharing with your children can bring a greater sense of peace to you and to them, as well as help with times of coming transition. As always, we at Stonebridge Financial Planning Group, LLC® are here to help you navigate the path and are ready to offer resources and plans to help you make it happen.