Having a lot of money comes with some concerns and obligations people often overlook or minimize. For instance, as a wealthy parent, you will likely have to have some difficult conversations with your kids about money and what will happen to your wealth when you are gone.
It can be very difficult to talk to your kids about money and estate planning. However, having the following four conversations with your kids, provided they are an appropriate age, can be of great benefit and relief to everyone when the time comes to carry out your wishes.
- Talk about the value of money. If you plan to leave your children sizable inheritances, you probably don’t want them blowing it all on something frivolous. To avoid this, talk to your kids about the work it takes to accumulate wealth. Help them understand that while there may be a lot of money now, it might not always be that way.
- Talk about your financial experiences. Whether you have always had money or have found financial success recently, talk to your kids about how you grew up. Talk about your family life and the role money played. Discuss your priorities in terms of investments, charity and conservative versus aggressive fiscal decisions.
- Talk about your children’s future plans. Are they going to go to college? Will they take over a family business? Find out what strengths and ambitions they have to understand what they might do with an inheritance to help you plan accordingly.
- Talk about your estate plan. As uncomfortable as this might be, it can be vital in setting expectations and addressing concerns about what you plan to do with your money and other assets. Preparing kids to receive — or not receive — a substantial sum of money can help them plan responsibly for their own future.
Again, talking to your kids about money and estate planning can be uncomfortable. However, when there are substantial assets at stake, having these discussions will be critical. Doing so sooner rather than later can ensure that you do not put off these conversations until it is too late.
Source: Washington Post, “A how-to guide form the ultra-rich: What to tell your kids about money,” Thomas Heath, June 16, 2017