Having the "Money Talk"

Having the "Money Talk"

For many of us, the first time we talk about money with our kids (aka “ the money talk”) is when they are younger and we explain the benefits of saving some of their allowance. As they get older, we talk about the danger of credit card debt and understanding the value of delayed gratification when it comes to their pocketbook.

The bigger “money talk” comes later in life, usually with adult children, and has to do with creating a framework for future management of an inheritance, ensuring that mechanisms are available for managing wealth, and having resources that can continuously help with that goal. Talking about wealth can be awkward. Talking about wealth transfer even more so. However, a little awkwardness now may prevent a lot of awkwardness later. Preparing your children or grandchildren for managing their inheritance can be easier if the process is formalized with a family meeting and roles and priorities are defined. Getting everyone together for this meeting can serve as an introduction to a current wealth manager or attorney that is assisting the family.  Whether or not the family plans to continue working with them after the inheritance is received, the potential heirs know who the resources are and how to contact them which will help with the eventual transition.

Having an experienced Trust Officer from Garden State Trust Company attend this meeting creates an opportunity for the family to address objections and clarify the reasoning that went into the estate plan. It also affords you the opportunity to have a knowledgeable professional posing questions or be ready to jump in to support with nuance as you lead the meeting. Some of the basic types of questions that should be addressed are as follows:

  • Are the assets going to be managed externally or internally?
  • Are the assets going to be managed by multiple parties or a single party?
  • Will any children object to the costs of management? If a family member will be in charge, what compensation is appropriate?
  • Will any beneficiaries want a full inheritance immediately, or object to having a single trust to continue to manage the assets?

When more complex questions come up, a trust officer can help explain the reasoning in order to reduce confusion or anxiety. The formality they bring makes it seem as though these are standard questions and issues to consider. Here are a couple of examples and the reasoning that could be behind them:

Will there be any objections to an unequal division of assets? Managing this perception is often about getting in front of it and explaining that it does not signify preference or love.  Perhaps some beneficiaries received more support during life and this is a balancing of the scales. Perhaps one heir has a greater need, such as a special needs grandchild. Perhaps there is a desire to move a family business fully into the hands of the child with an active role, excluding other children to reduce conflict, but providing them with a larger portion of the liquid assets of the estate.     

Will a portion or all of the estate be put toward philanthropic goals? Similarly, charitable giving is not choosing those goals over the children, but rather recognizing that there is greater need and that the children are already successful enough not to need more. Some might consider setting up a fund the beneficiaries can have input on in order to promote their own philanthropic desires.

Having a family meeting doesn’t necessarily mean that it’s a discussion on what should be done either, it may only be about informing beneficiaries about the upcoming plan. Either way, it provides an opportunity to ask questions and gain a clearer understanding of what needs to be done moving forward, and the knowledge of who to contact for continued guidance of asset management. This “money talk” may help transform an inheritance from a sudden windfall to a lasting legacy.