talking about money

Last week we talked about why parents might not want kids to know how much they have. Today we’re looking at why you should tell them.

1. What if you’re incapacitated?
We think it’s important for you and your children to know your roles in case of an emergency and you become incapacitated. Making a realistic plan is possible only when everyone understands what may be required. If your resources are limited and you expect your kids to contribute to your care, they need to know – now.

2. How do you want to be remembered?
What if you have to sell the family home to pay overdue taxes, and there’s nothing left for the kids? Or, you took a reverse mortgage and the balance becomes due on your death. It’s better to reveal these issues now than have your kids learn about them after your death.

3. How should you dispel your children’s expectations about your estate?
Without revealing the amount of your estate, level with your children about your future travel plans, possible charitable contributions, and your inability to predict your possible medical expenses. Let your children know they will receive whatever is left and how it will be divided among them. This should encourage kids to take responsibility for their own lives now.

4. How can you prevent lasting hostility among your heirs?
If you’re making an unequal distribution of your estate, explain your thinking to your kids – and give them a chance to air their feelings. If a sibling has needs greater than the others, make sure they understand and accept your decision. But they need to be reassured you love them all.

5. Shouldn’t you know your kids’ needs and preferences?
For example, do they want to keep the family beach house? If so, are they willing and able to share those expenses? Does one child need help buying a home or sending a child to college now, and be willing to receive less at death? Doesn’t it make sense to discuss these concerns now, rather then when it’s too late?

Have a good conversation today!

Carolyn Parr
202-544-5675
www.beyonddispute.com

Money. We agonize over how to stretch it, invest it, spend it, or give it away. And the older we get, the more we hate to talk about it. Especially with our adult kids.

Seniors with little money don’t want to burden their children. Members of the WWII generation — who value their self-sufficiency and independence — may especially resist these conversations. In these “traditional” families dad was the breadwinner, and mom raised the children. Once they were their children’s safety net. This role reversal hurts. They may feel ashamed and disappointed to ask for help.

Middle-class elders – good pensions, some investments, and long-term care insurance – may fret about how to bequeath their money. The questions for them: “What do our kids expect?” and “What’s fair?” These decisions can be equally tough.

Take a couple with three adult children: One is a successful engineer happily married to a lawyer with a big firm, two kids, and plenty of money. Another is a struggling actor. (The parents are paying his rent while he tries to get the ‘big break.’) The third is a divorced daughter with two children, a decent job, but living on the edge. They just paid her car repair bill so she could get to work.

What’s fair? Should parents give by need or in equal amounts? If by need, will the child who receives less feel less loved and valued? Is a will the place to reward a child who has been especially attentive to an aging parent? Or to express disapproval of one who made choices the parent didn’t like?

Wealthy families may have other issues: If they make generous gifts to their university or other charities, will the children be shocked? Resentful? Who should be named as Executor? Or as trustee of a trust? How strict or lenient should be the provisions of a trust? These questions become more crucial if the children are not friendly to each other. A will challenge can swallow the assets so fast that there’s nothing left but a residue of bitterness.

David Solie’s advice (How to Say it to Seniors): It’s easier to find good answers if we stop thinking of money as a “thing” to be accumulated and divided, and start seeing it as a means to express our values and the meaning of our lives.

The important thing for parents is to swallow your fear or pride and tell your kids (individually or all together) what you’re thinking. Answer their questions. Ask what they think is fair, and seriously consider their answers. Let them know you love them.

We welcome your views on this very sensitive topic!

Carolyn

202-359-6141

Money Talks