For most of us, discussions about money tend to be uncomfortable no matter who they are with – but especially so with our own children. We want to impart strong financial values and prepare them to be fiscally responsible with whatever legacy we leave them. Yet by their nature, inheritance talks can be difficult and distressing for some. These conversations, however, are small steps that can make a big difference in preparing your heirs to move onward and upward in handling their financial responsibilities; and they’re discussions that simply shouldn’t be put on the back burner any longer.
Keep in mind that strong financial values and habits are learned from parents not professors. According to the Jump$tart Coalition Survey of Personal Financial Literacy Among Students, while the vast majority of parents believe that their children learn everything they need to know about money in school, nine out of ten students acknowledge that whatever they know about money they learned from their parents.
It’s only natural to worry about how communicating your financial wishes to your children and beneficiaries will impact them and how they will react. You may be struggling to figure out where to even begin, wondering:
- How much financial information should I share with them?
- How can I ensure they make good use of their inheritance?
- Will leaving them money lessen their motivation to work hard?
- In addition to my money, how can I best impart my financial values?
It helps to draw from real-life experiences and lessons. Think about the financial practices (good and bad) that have made an impact on your own life over the years; the tricks you’ve observed and learned from others; and the things you wish you learned when you were younger. If you’re married, this is a discussion you will first want to have with your spouse to ensure you are both on the same page as far as the important values and learnings you want to impart to your heirs.
These conversations and strategies have to be well thought out. Are there any family misunderstandings or unfinished business that will need to be resolved? Are there certain topics that may be more emotional for one family member than another? Do your children/family members currently have solid, supportive relationships with each other? Set a tone that conveys your desire to consider everyone’s thoughts and feelings. Make sure to write down the handful of key points you want to communicate to keep the discussion focused. Anticipate and prepare for tough questions, and be open to making decisions that are in the best interest of your whole family rather than any one individual.
Strive for fiscal thoughtfulness and transparency
With financial matters, as in all aspects of life, children typically take their cue from how their parents behave. Have you ever hidden a purchase from your spouse, but your children were in the know? Have you ever talked about a new home or new car a friend has purchased with envy? Everyone falls into the trap from time to time, but it’s important to remember that as parents you are the financial role model that your kids will emulate.
If your kids ask how much you make or how much you are worth, instead of shutting them down with “none of your business,” try finding out why they are asking and be open if there’s a justifiable reason for the question. Greater transparency will help your heirs better understand that money isn’t a taboo topic to be feared and avoided.
Each family situation is different, with unique individual strengths, challenges, personalities and dynamics. Undoubtedly, you will have concerns about the financial abilities and well-being of some heirs more than others. Your SunTrust advisor can help you prepare for having an inheritance conversation with your kids, as well as put a plan and structures in place to turn your and your heirs’ financial stress into financial confidence.