You'd do anything to protect your family—but have you prepared your adult kids for how to attend to your (and their) financial affairs if you and your spouse should die unexpectedly? Do they know what important first steps they'd need to take?
SEE ALSO: Most-Overlooked Tax Breaks for the Newly Widowed
You need to help them be prepared for the worst. It's a different kind of emergency preparedness. When your kids were young, you no doubt discussed how they should handle all sorts of unusual and potentially threatening situations. Now they're adults. But are they still financially dependent on you for college or other support? If so, then losing you would also mean they'd need to deal with added stress over how they're going to meet financial commitments such as tuition or rent.
Fatal accidents are not likely of course. But think of this process as a form of insurance. Here at Halbert Hargrove, it's a step that has often been overlooked by our clients—before we call attention to its importance. In my experience of advising others on financial matters, making these preparations, and having this conversation with their adult children, has been an act of love and caring. It has also served as important milestone in their own financial and estate planning.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you've lost one or both of your own parents, you already know how meaningful conversations and thoughtful end-of-life preparations can lighten the burdens that come with that loss.
Is Your Estate Planning in Order?
First, several essentials that you'll need to have in place before you communicate to your kids:
Have you reviewed your estate plan lately?
You need to have an estate plan drawn up, as well as a process in place for regular review to ensure that it remains current with your changing circumstances.
Is your estate information organized and accessible?
The key to keeping things manageable is to have a written guide to your estate information in one place and to let your adult children know where they can find it. Keep it simple. If you've got your estate plan set up and an executor appointed, your children don't need to know every last item and how to manage these. That's the executor's job.
Determine What You'd Like to Happen
Next, decide what crucial things your kids would need to know and do.
Who is the go-to person your kids should call first?
You doubtless have assigned a person whom you trust to serve as the executor of your estate. Much will depend on the executor should he or she need to act in this role. Your adult kids should, at the very least, know this person—and they ideally have met in person.
Where should your kids be directed to look for information?
Choose a place in your home where you've housed a folder that contains the key information concerning your finances your kids will need in the event of your death. Again, keep it simple. Here's my suggestion: Two names and two phone numbers. Your kids should notify your estate attorney and your executor. Those two calls will set in motion the protections you've set in place.
What else is in that emergency folder?
This folder should also let your kids know where they can find your financial statements and other key information. Do you have a safe? A safety deposit box? If they don't know how to access these, this folder should contain codes, keys and instructions. Have you set up automated payments for tuition and rent for your college-attending children? How about health insurance payments?
Ultimately, you know best what should be in that folder, what your kids will need and what will help ease the transition should the worst happen to you.
It's a Caring Conversation
Sharing all of this is a conversation that many parents will find uncomfortable, and many young adults will resist. They don't want to hear about potential accidents, death and misfortune. The advantage is that you can keep this conversation relatively short, since you'll have prepared a clear and streamlined emergency response plan to make it more manageable.
If tragedy does strike, you'll have helped alleviate one source of pain by removing immediate financial concerns. You've made a plan, and your kids know where to retrieve it. It's a point of reassurance—and if it's ever needed, it could end up protecting them from a world of worry and anxiety.
See Also: 4 Key End-of-Life Documents to Get in Order
Russ Hill CFP®, AIFA® is CEO and Chairman of Halbert Hargrove, based in Long Beach, CA. Russ specializes in investing, financial planning and longevity-awareness solutions.
-
The Most Tax-Friendly States for Investing in 2025 (Hint: There Are Two)State Taxes Living in one of these places could lower your 2025 investment taxes — especially if you invest in real estate.
-
Want To Retire at 55? See If You Can Answer These Five QuestionsWho said you can’t retire at 55? If you say yes to these questions, you may be on your way to an early retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
One Small Step for Your Money, One Giant Leap for RetirementSaving enough for retirement can sound as daunting as walking on the moon. But what would your future look like if you took one small step toward it this year?
-
This Is What You Really Need to Know About Medicare, From a Financial ExpertHealth care costs are a significant retirement expense, and Medicare offers essential but complex coverage that requires careful planning. Here's how to navigate Medicare's various parts, enrollment periods and income-based costs.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest RatesAs speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
-
This Is How Lottery Winners Build Lasting Legacies, From a Financial ProfessionalWinning a massive lottery jackpot, like the recent $1.4 billion Powerball, requires seeking immediate legal and financial counsel, protecting your identity and winnings and planning your legacy.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your WalletInterest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
I'm a Retirement Planner: These Are Three Common Tax Mistakes You Could Be Making With Your InvestmentsDon't pay more tax on your investments than you need to. You can keep more money in your pocket (or for retirement) by avoiding these three common mistakes.
