Family Continuity Plan: Should Your Kids Know How Much Money You Have?

Should Your Kids Know How Much Money You Have? — How to Create a Family Continuity Plan

Families will talk about almost everything. Careers, health, vacations, weddings, all of it! Money, however, can be a little different.

Many parents have spent decades building their wealth but have never had a serious conversation with their children about it. There is often worry that sharing too much will change their children's behavior, create expectations around an inheritance, or just flat out make everyone uncomfortable.

So, should your kids actually know how much money you have?

The answer is: they don't necessarily need to know everything, but they should probably know more than nothing. The goal is to kick readers into gear with creating a family continuity plan as well as how to conduct one. How do you start? The best way is to get everyone together for a “Family Finance Meeting”.

The Family Finance Meeting 

One misconception about family finance meetings is that Mom and Dad need to sit everyone down and announce their net worth.

Instead, it’s a great opportunity to help the family understand your financial plan, your wishes, and the responsibilities they may someday inherit.

Depending on how your family operates, you might discuss your overall financial situation without ever mentioning a specific dollar amount, or you might lay out every fact and figure. In this regard, there is no right or wrong answer. What matters is that there is a clear laid out path and expectation that your family can carry out.

Alright, Everyone’s in the Room… What Do We Talk About?

Getting everyone together for such a momentous occasion is something to be very proud of! But… What do you talk about now everyone is in front of you?! This may come with great ease for one, or great difficulty for another. Regardless, there are very important topics that need to be, or should be discussed during this meeting. The following is our suggestion on how to go about your Family Finance Meeting.

What we have found is that beginning with the purpose behind your money: Where did you, or even your parents or grandparents start from? What do you hope your money accomplishes during and after your lifetime? What values do you want passed on to the next generation?

From there, the conversation can become more practical. Your family may benefit from knowing and discussing:

• Who your financial advisor, CPA, and estate attorney are.
• Who has been named executor, trustee, or power of attorney.
• Where important estate and financial documents are located.
• Whether trusts are part of your estate plan.
• Your general wishes for family property or a family business.
• Any charitable intentions that are important to you.
• How you hope an eventual inheritance will be treated.

These conversations become especially important when one child or family member has been given a particular responsibility or role. If your oldest daughter is going to serve as trustee, for example, she should understand that responsibility before the day arrives when she suddenly has to perform it.

How Much Should You Tell Your Children?

As was stated earlier in this article - there isn't one correct answer. For some families, complete transparency works very well. Adult children may already be financially established, responsible, and involved in their parents' planning. For others, discussing exact dollar amounts may create more problems than it solves.

You can always start with the big picture.

You might say that you've accumulated enough to comfortably support your retirement and that there will likely be assets left for the family someday—without telling your children exactly how much. Over time, you can provide more information as it becomes appropriate. The goal isn't necessarily financial disclosure. The goal is financial preparedness.

How to Have the Meeting

The biggest mistake that you can make with having one of these meetings is waiting for a health crisis or emergency to start the conversation. Instead, schedule a time now, when everyone can talk without distractions and explain why you want to have the discussion. The first meeting doesn't have to cover everything. In fact, it's often better if it doesn't.

Start with your family's overall plan, explain where things stand, and let your children ask questions. You may find that the conversation naturally leads to topics you hadn't originally considered. And remember that this shouldn't be a one-time event. Families change. Financial situations change. Estate plans change. Children get married, grandchildren are born, businesses are sold, and retirement plans evolve.

Revisiting the conversation every few years can help keep everyone on the same page.

Can My Advisor Be of Any Help?

One thing that should be considered, is having your financial advisor facilitate and/or conduct the meeting. Sometimes it's easier for parents to discuss these topics when someone else is there to guide the conversation, explain financial concepts, and keep everyone focused on the purpose of the meeting.

The biggest benefit to working with your advisor, is that it keeps everyone accountable! As we stated earlier, it can be very easy to put off meetings like this. With your financial advisor involved, it is their biggest responsibility to ensure that everyone is on the same page.

 It also gives your children an opportunity to meet the professionals who already understand your financial situation. That relationship can become incredibly valuable if there is ever an emergency or if your children eventually become responsible for helping manage your affairs.

Conclusion

So, there you have it — some of the key things to consider when getting your family involved and creating a continuity plan for your wealth. While we covered a lot in this article, I often find that these conversations lead to even more questions, and that is absolutely fine!

If you would like help understanding what should be included in a family finance meeting, or would like someone to help facilitate the conversation, please do not hesitate to reach out to a Callesen Wealth Management advisor. We would be happy to help you and your family create a plan that brings greater clarity, confidence, and continuity to the wealth you have worked hard to build. Until next time!

- Mason Callesen, CFP

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