On the awkwardness scale, talking to your adult children about your finances ranks a close second to the “birds and the bees” discussion.
Did you choose to let your children learn about the opposite sex from their friends? I hope not! Then why would you want your children to learn of your finances and final wishes from a will, assuming you have one?
With that in mind, here are four tips to help you open the airwaves about your finances:
1. Give them advance notice.
Make all children aware that you would like to discuss your finances in the near future. This will give them time to formulate their thoughts and to prepare psychologically and emotionally. The last thing you want is an emotion-filled discussion that veers off course.
2. Ease into the topic.
The first discussion does not have to be an in-depth laundry list of everything financial. You can begin with the easy stuff. Where you keep important documents such as wills, powers of attorney, or healthcare directives, to name a few. What types of insurance you have – health, life, long term care. What type of investment accounts you own, and what investment firm helps you manage those accounts.
You should also discuss your circle of advisors. Tell them about your Certified Financial Planner, Attorney, CPA, Banker, or Life Insurance Agent. These professionals will be important people to know as you go forward.
3. Select a neutral location.
Consider asking your financial advisor or attorney to organize the meeting at their office. By having an objective third party mediate the conversation, you may be able to avoid confrontation.
4. Schedule a follow-up meeting.
Once your children are able to process the information from the first meeting, they will probably have more questions. At a second meeting, you can dig deeper. Depending on how much you want to share, you could bring bank statements, investment account statements, life insurance policies, legal documents, etc.
You may even want to share what is in your will. This could avoid potential conflicts down the road. A clearly communicated will is much less likely to be subject to a contentious process at your passing.
In conclusion, it’s never easy to broach a touchy subject like your financial situation, but by taking these steps to ease into the conversation, it may be less awkward than you imagine. Who knows, it may even bring your family closer!
This material has been prepared for information purposes only, and is not intended to provide, and should not be relied on solely for tax, legal or accounting advice. This commentary represents the opinions of Greenwood Capital Associates, LLC and is for informational purposes only. Investment Advisory Services are offered through Greenwood Capital Associates, LLC, an SEC-registered investment advisor.