It may be easier than you think
Modern families come in all shapes and sizes. They include first marriages, second marriages, same-sex marriages, divorced marriages, single adults, stepchildren, adopted children, family members with disabilities, family members who live in different countries — there really is no end to the make-up of modern families. So, if talking about money within your own immediate family is a delicate issue, imagine the complexity of expanding this conversation between generations and extended family members.
By talking openly about money, we have found that families can find solutions to life’s common crises and help minimize family stress. Through open dialogue, family members can talk about the resources available in the hopes of ensuring there are sufficient resources to provide a debt-free post-secondary education for children; that there are sufficient resources to care for elderly parents; and that the family property will be passed along to future generations.
The practice of one generation handing down money, heirlooms and life lessons to the next generation, has always been a part of family dynamics. We all want to know that our loved ones are properly cared for during their lifetime. This is about us talking with our family about what is important to us, and what is important to them.
Sounds simple, right?
But sometimes, healthy conversation can be stopped in its tracks by common family dynamics of privacy, judgment, pride, rivalry, envy and fear. Financial decisions can be very sensitive because they communicate more than just the way money is handled. Money can represent love, security, independence, power and control.
However, if family conversations are approached from the desire to respect wishes of the loved one and provide the best possible care or support in times of crises, then it may be easier to open the dialogue. Healthy conversation does not necessarily mean knowing every detail, but there are general themes that need to be clear, so that expectations can be met, and conflict avoided, especially in times that are highly emotional.
The following is a very simple list of general topics that each family should have a basic understanding:
Spouse to spouse
• Priorities concerning cash flow / debt / holidays
• Retirement goals
• Back-up plans for emergencies (job loss, health• crisis, etc.)
• Children’s education plans
Parent to child
• Acting as a role model to teach values and
• responsibilities concerning money Education planning — what are parents willing to contribute — what level will children be expected to participate in financing
Adult child to adult parent
• Expectations for adult child’s role in caring and
financially supporting aging parent
• Guardianship issues with respect to children in case of early death Wishes and financial resources with respect to• funeral arrangements
Adult parent to adult child
• Wishes and financial resources with respect to long-term care and independence
• Wishes and financial resources with respect to funeral arrangements
• Estate issues — general terms and intentions behind contents of their Will or any specific bequests
Sibling to sibling
• Sharing of responsibilities with respect to parents’ long-term care
• Parental estate and division of financial and sentimental assets
• Guardianship issues with respect to children in case of early death
• Wishes and financial resources with respect to funeral arrangements
The basics
There are several important documents that every adult should have — a Will, a Power of Attorney for Property and a Power of Attorney for Health Care.
Your Will not only names your executor or trustee, provides for guardianship of minor children, and declares how you want your assets to be divided, but is the final message that you will be passing along to your family about how these are to be managed. Take the opportunity beforehand to provide clarity on its contents, so there is no unintentional pain or discord. Clearly the more complex a family or the family’s assets are, the more complicated the issues can become.
When dealing with estate issues, it is wise to involve your accountant, your legal representative and your financial advisor, in order to ensure that the passing of your legacy transpires per your intentions in a timely and tax efficient manner.
The Powers of Attorneys (POA) will ensure that should you be unable to do so, that someone you trust will be authorized to make financial and health care decisions according to your wishes.
At a minimum your POA should be aware of the location of your legal documents, your team of professionals and a listing of your personal assets and liabilities (investments, insurance policies, mortgage documents, etc.).
This will allow that person to locate these documents when required and will also let them know that you are on top of things and give some peace of mind.
How to get started
You may already be having these conversations with your family members. But if you’re not, then there are some easy ways to get this type of dialogue started:
• Approach the discussion with a positive attitude.
• Recognize money talk does not have to happen in a single conversation, but can and should be an ongoing dialogue.
• Set a tone of confidence, openness, and trust.
• Talking about your own financial situation, an article you read, or the example of a friend or acquaintance, can be a catalyst for your family member to open about their own financial situation.
• Make the talk an equal exchange, not a lecture and listen carefully to what is being said.
• Be aware of the language you use — using words like “legacy” rather than “inheritance” can soften the conversation.
• Remember that these conversations are based on “caring” not “greed” – you are having these conversations to ensure that you’re loved ones have enough resources to care for themselves.
• Remember that independence, fear and control are intricately woven into any financial conversation — be respectful.
• Families often choose to treat other family members “fairly” — but not always “equally” depending on personal financial situations — talk about your intentions and reasoning so that it is understood.
Don’t be surprised if you feel uncomfortable the first time you try talking about these issues. Most families aren’t very good at discussing them. Just remember, this is the start of an ongoing dialogue. It is about sharing what is important to you with those that are important to you. n
This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances.
NOTE TO READERS: THE VIEWS OF THE AUTHOR DO NOT NECESSARILY REFLECT THOSE OF COYLE MEDIA GROUP . THIS ARTICLE IS PROVIDED AS A GENERAL SOURCE OF INFORMATION ONLY AND SHOULD NOT BE CONSIDERED TO BE PERSONAL INVESTMENT OR LEGAL ADVICE, OR A SOLICITATION TO BUY SERVICES. READERS SHOULD CONSULT WITH THEIR FINANCIAL OR LEGAL ADVISOR TO ENSURE IT IS SUITABLE FOR THEIR CIRCUMSTANCES.
