Talk to Your Family About Money
By Luma Wealth on July 13, 2020
Don’t Let Your Family Go from Riches to Rags
July is Family Reunion Month, a time when many people reconnect with extended family members to share stories and make new memories. Although social distancing may be keeping you apart from each other this year, it’s still a great time to reflect upon the past and prepare your loved ones for the future.
Unfortunately, the vast majority of Americans never take the time to talk to their heirs about money, and many don’t even prepare a will. In its 2020 Estate Planning and Wills Study, caring.com found that most Americans procrastinate in estate planning because it’s unpleasant to think about, and less than half of adults aged 55+ have a will.1
A conversation about money doesn’t have to be uncomfortable. Here are three topics to get you started:
1. Talk to your family about their hopes and dreams. Thomas Deans, author of Willing Wisdom, recommends beginning the estate planning process with a family conversation about the future. In his book, he outlines seven questions to initiate a discussion about your legacy, including whether an equal inheritance is fair, how an inheritance would enhance your heirs’ dreams and what they may do with the assets. You’ll gain insights that may influence your estate planning decisions; and sharing your thoughts and reasoning behind divvying things up can prevent ill will in the future.
2. Provide financial guidance. It is estimated that 70% of wealthy families squander their wealth by the second generation and 90% lose it by the third.2 Protect your legacy by setting up your loved ones to succeed. Give them money management tips, for example, teaching them why and how to invest, the rationale behind asset allocation and how financial guidance can help them achieve their long-term goals. You can also provide a greater appreciation for their inheritance by explaining how your family generated its wealth and some of the financial lessons learned along the way.
3. Share your values and philanthropic vision. If charitable giving is part of your plan, talk to your heirs about how you decided which organizations to support. Engaging them in a conversation about philanthropy will both inform them about your intentions, and may also inspire a legacy of giving.
You may be skipping the reunion this year, but there’s no time like the present to prepare your heirs to inherit your wealth. Your Luma Wealth advisor can help with an array of financial literacy tools as well as tips for starting a family conversation about the future.
