There’s an old saying that it’s best not to talk religion, politics, sex or money in public settings.
Somehow that rule carried over to family dinners as well — especially holiday dinners where many generations with widely varying views might be gathered. And sure, with the state of politics and religious divisiveness these days, it’s probably still a good rule if you want to keep the peace at your table.
But shouldn’t you talk about money at some point? What if your family now only gathers at the holidays — should you still avoid talk of money?
Should an adult child know your finances?
Your children do not need to know your income, your bank account balances, your investment portfolio, or your assets and liabilities. Until they do. That timing can be tricky.
If you are “getting up in years,” there will come a time when at least one of your children, or another trusted friend or relative, will at least need to know a general outline of where you bank, where your investments are held, and what you own.
Is there life insurance? Disability insurance? How about long-term care?
In the event of your incapacity, someone will need to handle these matters for you. That will be made easier if that named party knows where to start. Keep an updated list of financial institutions with which you have accounts, what insurance you have, and important contact information.
Then make sure that list is readily accessible or regularly shared with the person you intend to take over should you become incapacitated. Have that conversation.
How much should others know?
If you have an estate plan, and you’ve included your children or other relatives in that plan, should you tell them? This is a difficult question, usually met with the very lawyerly “it depends” answer. But it does indeed depend on a variety of factors.
If your child (or other beneficiary) is an adult and you’re making a gift to them in your estate plan, you have in fact made some decisions for them, and it may be worth discussing that with them. For example, you may have provided that your three children each get 1/3 of your estate, outright and free of trust, at your death. You trust them and you don’t want to “control from the grave.”
But maybe your child would prefer you leave their share in trust where it is potentially safe from creditors and easily defined and maintained as separate property. Maybe your child is well off enough that they’d prefer you leave their share to their children or your other children.
If you have chosen someone to act as your successor trustee, or your agent for power of attorney or health care directive, you should let them know that as well. You may be surprised to learn they don’t want that responsibility. Or your children may have a different idea about which of them would be the best choice.
Setting and controlling expectations
Another reason for having the dreaded “money” discussion with your family is to both set and control expectations.
You don’t want your beneficiaries sitting around eating bonbons and sleeping eighteen hours a day waiting for you to die so they may inherit the fortune they believe you have. Likewise, you may not want a beneficiary who has never managed money before to suddenly be handed a large inheritance with no idea it was coming or what to do with it. In both cases, you’d be setting your beneficiary up for failure.
An adult beneficiary who is receiving a large portion (or all) of your estate should know that they’ve been included in your estate plan. You don’t have to tell them “how much” they’re getting of course, but disabusing them of the notion they will have won the inheritance lottery is wise, unless of course they have. Letting a child or other beneficiary know who your investment advisors are and how you manage money can also be extremely helpful.
Discussing the structure of the inheritance is also a good idea.
Are they getting funds and/or property outright? Will their inheritance remain in trust? If so, are they the only beneficiary? Are their own children beneficiaries now or in the future? What about their spouses? Will they be taken care of or should your beneficiary be sure to plan for their spouse separately? What can the trust funds be used for? Who have you named as Trustee and why?
While ultimately it’s your estate and your decisions to make, it is generally beneficial to all if at least the general terms and structure of your estate plan are discussed.
You don’t have to hand your adult children their plate of turkey with one hand and a copy of your bank statement with the other. You don’t have to start the holiday dinner with “I’m thankful I have $X in the bank, two retirement accounts, and a home worth $Y.” In fact, please don’t.
But if holidays are the only time your family can gather together in one place, consider setting aside some time to talk about your plans for the future and the “what ifs” that happen as we age. You’ll be glad you did. And hey, these days it’s got to be better than a political discussion.
Teresa J. Rhyne is an attorney practicing in estate planning and trust administration in Riverside and Paso Robles, CA. She is also the #1 New York Times bestselling author of “The Dog Lived (and So Will I)” and “Poppy in The Wild.” You can reach her at Teresa@trlawgroup.net