11/12/2022
Money Talks - Using Christmas to talk about money.
The holidays are a time when we set aside demanding schedules to come together with loved ones. For some far-lung families, it’s one of the few times that everyone comes together in a single place. Using these gatherings as a family financial discussion is probably not high on your agenda, although it’s something to be encouraged. These get-togethers create an opportunity to discuss sometimes sticky financial issues that involve different generations – from gift-giving traditions to estate planning.
Talking to your adult kids about your finances and your plans for your estate, may be one of the most important conversations you’ll ever have. It gives you the chance to tell your kids how you want your estate to be handled, whether they need to worry about supporting you in your old age, or whether you have plans to help with their children’s education costs. It also sets them straight as to whether they will get a windfall, a topic that can be a disconnect between parents and children. A recent study by MFS, a money management firm, found that the majority of Gen X and Y expected an inheritance to help with their own retirement, but less that half of the baby boomers felt it was important to leave one!
Where should we hold it?
You want everyone to feel comfortable in the setting, but you also need to get things done. For some families, an outdoor fire and wine may help the mood. For others, around the kitchen table will work well. If you think you need neutral turf, consider booking a room at a restaurant.
What topics need to be addressed?
The best family financial meetings have a predetermined agenda. What do you feel needs to be discussed as a family? Are there issues that have been swept under the rug and need to be raised. A single topic is fine by the way! You don’t need a laundry list, especially when you’re getting started. Everyone’s list of topics might be different, and it might be you stick to care and housing for aging parents. For another family, it might be preparing a younger generation to inherit what may be a significant amount of money. Given the time of year and how we like to spend our holidays, it could be how the family holiday home is dealt with in estate planning. Before coastal property became so valuable this wasn’t so much of an issue, but where beneficiaries are in very different financial situations, this has the potential to create real tension.
Where trusts are involved, a shared understanding of the trust’s objectives can help ensure the intentions behind its existence are met. At some stage, there might be a transition to younger trustees. Where this is happening, it’s useful they understand the relationships the trust has with external advisers such as lawyers and investment professionals, as this will smooth any hand-over taking place between generations.
Listen to your parents and Treat them with respect.
Keep in mind you may not agree with very financial decision your parents make. Still, there is no need to parent your parents! Instead of telling them what to do, ask questions that clearly express your concern. “What can I do to help you?”. “How do you think we should handle this? ”Do you feel overwhelmed by any aspect of your finances?”. With good intentions and a willingness to listen, your family can work through this challenging topic, one issue at a time, and when the hard work is done, your family will act and react more effectively.
