The holiday season is a time for families to come together, share memories and create new ones. Amid all of the gift-giving and other celebrations, holiday gatherings may be one of the few opportunities to provide important financial information to your adult children all at the same time — as you’re all together. The holidays present a unique opportunity for parents to speak with their adult children about a difficult subject — money.
One of the most important conversations involves plans for your estate — where assets will end up when one or both parents pass away. If you feel the time has come to broach this topic, find an hour or two to pull everyone together for a conversation.
Here are some tips for speaking with your adult children:
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.
Don’t Feel You Need to Provide Specific Numbers About an Inheritance.
While this may seem counterproductive, there are good reasons to avoid disclosing the details. One is that you and your spouse/partner don’t know how long you will live. The longer you do live, the more money will be needed to pay for lifestyle needs, long-term care and other expenses.
If your children believe they stand to inherit a specific amount — especially if it’s a large sum — it could impede their own plans. They may decide to save less money or lose the drive to achieve their goals — neither which meets the set of values you probably desire to pass on.
In addition, the children could begin to influence your spending decisions. For example, would you choose a mid-range nursing home instead of a better one, knowing this expense will impact their inheritance? And, finally, if your adult children share information about their potential windfall with their spouse, the spouse could use this information to their advantage in the event of a divorce.
Which of Your Children Will Make Health Care and Financial Decisions?
Consider letting the children know which one of them has been designated to make key financial and medical decisions in the event you and your spouse/partner become incapacitated.
The person charged with the financial responsibility needs to have access to key data — legal documents, financial statements and computer passwords. Place this information in a sealed envelope for your child(ren) and instruct them to open it only when needed if you desire to keep your financial affairs private until then.
For your health care agent, make sure you do discuss your wishes for food, water and life support with them and provide them with the signed health care power of attorney document. If something happens to you, this health care document needs to be quickly accessed.
How Will Children Receive Any Inheritance?
Let your children know how they will receive any inheritance; will it be outright or in a trust? A common reason to establish a trust is to help protect any assets from an unfavorable event, such as a divorce or lawsuit. A trust can also help ensure your money is passed along to any grandchildren if the adult child dies prematurely.
Share Information About Insurance.
Your adult children are likely the people who will care for you later in life, or coordinate your caregiving needs. They need to know information about your medical and long-term care insurance and what to do if there are gaps in coverage. For example, will long-term care insurance cover all your nursing home expenses, or will you need to use personal funds to supplement the cost?
Also, provide children with all life insurance information, including the companies that issue the policies and contact information for your insurance agents.
Gather Information About Professional Advisers.
Make a list of all people your children will need to know and contact in the event of your death or inability to act on your own behalf. These include attorneys, financial planners and accountants, as well as the insurance agents mentioned above.
Finally, Take Their Questions.
While it may be difficult for a parent to share this information, it’s even more difficult for most children to discuss their parents’ eventual demise. But it’s much better to provide them with information and answer any tough questions while you are alive and mentally healthy. A lack of information now may cause confusion and possible conflict among family members down the road.
It may not seem like the right time to discuss this topic, especially if your house is filled with playful grandchildren and everyone wants to enjoy this special season. But the goal is to help your adult children understand how their future will be impacted once you aren’t around. So, consider finding a sliver of time to help them understand your financial and estate plans, and how you’ve prepared to make life easier for them for years to come.
-
Dow Adds 472 Points After September CPI: Stock Market TodayIBM and Advanced Micro Devices created tailwinds for the main indexes after scoring a major quantum-computing win.
-
October Fed Meeting: Live Updates and CommentaryThe October Fed meeting is a key economic event, with Wall Street waiting to see what Fed Chair Powell & Co. will do about interest rates.
-
New Opportunity Zone Rules Triple Tax Benefits for Rural Investments: Here's Your 2027 StrategyNew IRS guidance just reshaped the opportunity zone landscape for 2027. Here's what high-net-worth investors need to know about the enhanced rural benefits.
-
The OBBB Ushers in a New Era of Energy Investing: What You Need to Know About Tax Breaks and MoreThe new tax law has changed the energy investing landscape with expanded incentives and permanent tax benefits for oil and gas production.
-
Ten Ways Family Offices Can Build Resilience in a Volatile WorldFamily offices are shifting their global investment priorities and goals in the face of uncertainty, volatile markets and the influence of younger generations.
-
Should Your Brokerage Firm Be Your Bookie? A Financial Professional Weighs InSome brokerage firms are promoting 'event contracts,' which are essentially yes-or-no wagers, blurring the lines between investing and gambling.
-
Supermarkets Have Become a Pickpockets' Paradise: How to Avoid Falling VictimSome stores regularly rearrange inventory with the aim of increasing purchases, and they're creating opportunities for thieves to steal from customers.
-
I'm a Wealth Adviser: These Are the Pros and Cons of Alternative Investments in Workplace Retirement AccountsWhile alternatives offer diversification and higher potential returns, including them in your workplace retirement plan would require careful consideration.
-
I'm a Financial Planner: If You're Within 10 Years of Retiring, Do This TodayDon't want to run out of money in retirement? You need a retirement plan that accounts for income, market risk, taxes and more. Don't regret putting it off.
-
Five Keys to Retirement Happiness That Have Nothing to Do With MoneyConsider how your housing needs will change, what you'll do with your time, maintaining social connections and keeping mentally and physically fit.
