Financial Advice for Retirement, Social Security, IRAs and Estate Planning

How To Involve Your Children in Your Estate Plan

Published on: Jun 11 2019
estate planning

Of course it’s a good idea for parents to talk with their children about money from an early age…

But it’s never too late to start… if you didn’t start early.

First, you need to be clear what the money means to you and what its purpose is.

You also should know what’s important to you in general — the things that you value.

You also want to consider how you communicate and how others in your family communicate.

Everyone has a different communications style.

When the styles don’t mesh and no one tries to modify his or her style, there is no communication.

Consider how your family members communicate and decide if your style can be modified during family get-togethers to improve communication.

The next steps are clear and should become a pattern over time.

The family should spend time together regularly, if at all possible. When the family is spread around the country, it might be an annual together of the whole family with smaller gatherings when convenient for some members.

These should be social gatherings with nothing related to money or estate planning, unless it arises naturally.

The older family members should take opportunities to pass on family stories, values, and messages.

The children are never or too young or too old to start this.

There also should be an effort to hear what’s important to the other family members.

Once communication is improved, there can be more formal, planned gatherings periodically to discuss the family wealth and plans for it.

Ideally, this leads to a process in which the children are involved in decisions about the money.

This should be a gradual process.

You want to impart your values and experience and teach the children about handling money.

But you want a transition, because you don’t want decisions made that endanger your lifestyle or the wealth.

Many people find the transition is best when children are first involved in choosing the objects of charitable gifts.

This can increase their understanding of where the money came from and what’s needed to ensure it is there in future years.

You need to break the traditional cycle in which the family patriarch or matriarch who accumulated the wealth retains a tight hold on it until death.

Then, the children suddenly have full responsibility for it.

Things work out better when the transition is gradual.

At some point, your financial advisors are invited to meet the family and explain their roles in shepherding the money.

Some financial professionals like to meet separately with family members so they can learn things that people aren’t willing to say in front of other family members.

The estate planner could explain the current plan.

An investment advisor can explain the portfolio and the strategies for it.

These experts probably can explain things and answer questions better than you can, or family members might be willing to ask them questions they wouldn’t ask you.

The most successful wealthy families eventually establish a formal process.

They often form a family council and might have a family charitable fund with a board of family members that chooses the gifts.

And in some cases they bring in experts on family wealth to moderate discussions.

Whether or not your situation requires an estate planner, keeping the lines of communication open with your family on financial issues is always the best course of action.

P.S. Follow this link to read Part One of our series: Forget Estate Planning: Follow this “Inheritance Plan” instead.

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