3 Money Conversations Families Must Have

Most families agree that money conversations are incredibly important, especially surrounding the topics of retirement and inheritance. But most children and parents cannot come to an agreement on why or what topics exactly are most important, and despite concluding that finance and death are crucial, neither generally agree on when to approach these topics – and most never approach them at all.

Despite the fact most Americans know how important it is, only a fraction of people even have an estate plan, and even less discuss said estate plan with their parents or children, a trend that has been growing.

Money Talks; People Don't

There is a severe disconnect between the general understanding of how important it is to discuss sensitive financial plans with your loved ones, and the reality. Partially, some professionals believe this can be attributed to fear. But largely, the simplest explanation and cause of this disconnect is procrastination.

We tend to put off things that we consider to be far in the future, and there is a widespread unfortunate misconception that topics such as end-of-life care and estate planning are only relevant when problems arise that require these topics to be broached in greater detail. The truth is that it is much more efficient, both financially and emotionally, to discuss these issues long before financial or health problems might arise.

While most individuals in a marriage readily discuss retirement with their partners, they do not speak about it with their children, despite the effects that retirement might have on them. Likewise, many children do not address inheritance with their parents, out of a reluctance to seem greedy or indifferent to the sensitive nature of death, despite the financial significance an inheritance might have on their own lives and plans.

Do not wait for problems to occur before you make the decision to talk about crucial financial decisions and plans.

Money talks are not just a way to discuss plans and coordinate financial efforts between generations – they are ways to air out fears and address the conversation openly. Perhaps your children are far more ambitious than you would have guessed – or you can speak about their inheritance but emphasize the importance of financial independence.

1. Estate Planning and Inheritance

Inheritance can be a very complicated topic for certain families, especially if the relationships between members of the family are strained. However, that does not make it any less important to discuss inheritance plans well before funeral costs and grieving.

Your children cannot force you to change your estate plan. But by being transparent in your estate plans, you can help the family come together to discuss it. By doing away with your fears of making your children dependent on you once again, you can open conversation between adults on a crucial financial matter, helping your children plan around their inheritance, while helping you keep a peace of mind regarding your children’s financial future.

By addressing any family issues well before probate court, you can avoid will contests, painful misunderstandings and other awkward complications. Clearing the air by speaking out personally about your estate plan will make the inheritance process go much smoother when the time finally comes.

2. Retirement Security and Expenses

Retirement must be planned. To live comfortably after exiting the workforce, an individual must keep in mind the costs of their lifestyle and keep a sizeable fund open for emergencies and unforeseen expenditures. Some couples begin saving decades in advance, while others take steps to cautiously and meticulously invest their profits together, building a portfolio of assets and properties, as well as enough liquid wealth to see them through their years.

Some parents plan to incorporate their children into their retirement, relying on them partially to fund certain aspects of their life, including shelter and food. Most, however, agree that their children should have no part in their retirement. Either which way, how couples or individuals choose to retire has a tremendous impact on the finances of the family, and on the children. Being transparent about your plans and discussing them with the family can clear up unspoken questions and make way for a smoother transition into retirement, especially if you plan on enlisting the help of your children.

3. Elderly and End-of-Life Care

Every individual has the right to determine how they want their life to end. To this end, the law protects the will of individuals who wish to reject certain healthcare options, including invasive treatment or resuscitation.

Documents such as a living will give individuals the ability to refuse treatment under certain circumstances, if it goes against their dignity or if they simply wish not to artificially prolong life. Beyond this, people can also name trusted healthcare agents to act on their behalf, making end-of-life decisions for them if they are incapacitated.

It is vital to discuss these decisions with your family, especially with your chosen healthcare agent and with your children. It is also wise to set up and discuss elder care long before such time comes. Some parents rely on their children to finance their elder care and see them through their dotage, while others set up a fund on their own to finance their stay at a specialized facility.

Get the Money Conversations Going

Ultimately, family money talks are not meant to represent an opportunity for children or parents to intrude on financial plans and make decisions on their behalf. Everyone can contribute through voices and ideas, but it is up to everyone to make their own choices, and only their decisions count.

It is undeniably scary to talk about death and how to prepare for its consequences. But sooner or later, it is important to confront one’s mortality and make the proper financial decisions based on it – and doing so sooner can save your family a lot of grief and trouble.

A simple, effective, and applicable estate plan, understood by the family and executed by a capable administrator can do away with unnecessary paperwork down the line and ensure that your financial legacy has a clear path to its rightful heirs, while giving your family the most time and room possible to grieve and move on.

By speaking frankly of your retirement goals and estate plans, you can also remove much uncertainty from the minds of your children, and free them up to plan for their financial future while keeping in mind what they can and must do for you. Regardless of whether you plan to enlist your children in your elder care or rely entirely on your own savings, being clear about your intentions and plans is important for everyone involved.