“An immature or troubled child could try to misuse your money or goad you into handing over assets you might need later. Complicated family dynamics, or just your desire for privacy, may make you hesitant to open up.”
Talking about who will control your assets is always a tricky thing, says AARP.org in a recent article “Do Your Kids Know Where to Find All Your Money if Tragedy Strikes?” The risk of adult children being caught unawares or without access to a parental funds could lead to big problems if the parents should die or become incapacitated unexpectedly. Experienced estate planning attorneys know the conversation is better had now than pushed into the background with a giant surprise in the future.
When a parent’s finances are revealed only after their death, or if dementia strikes, the unexpected responsibility can create a lot of stress. However, there are also reasons not to tell. If a child has a substance abuse problem, or is in a bad marriage, this information may be best kept under wraps. There is no one-size-fits-all solution. However, there are some universal rules to consider.
- Short on cash? Don’t make a secret of it. If you might end up needing help during retirement, it’s best to tell your children early on. Family members have helped each other since there were families, but the earlier you involve them, the more time they have to help you find more resources and make plans.
- Dealing with big numbers? You might want to wait. The amount of money you have worked a lifetime to save may look like an endless supply to a 22-year old. When young adults learn there’s a pot of gold, things can go south, fast. If you have a spouse and are relatively young and healthy, then all the children need to know is that you are well set for retirement. By the time you’re closer to 80, your children and/or a trusted financial representative and your estate planning attorney will need to know where your money is and how to access it.
- How to share the details? Start by making a complete list of all of your assets, including account numbers, key contacts and any other details your executor or agents will need to handle your affairs. Put that information into an envelope and make sure that your children or your estate planning lawyer know where it is. If the information is kept on your computer or on an online portal, make sure the right people have access to the passwords so they can access the information at the appropriate time.
- How to share the big picture? Estate planning attorneys often recommend a family meeting in their offices, with all of the children present. It’s helpful to have this meeting happen in neutral territory and, even children who tend to squabble among themselves, behave better in a lawyer’s conference room. You can explain who the executor will be, and why.
- Introduce them to your team. Chances are you have a long-standing relationship with your estate planning attorney, financial advisor and accountant. These are the people your children will be working with after you have passed. Having them meet before you die or become incapacitated will lead to a better working relationship during what will be a stressful time later when you are gone or unable to act in your best interest.
Reference: AARP.org (April 24, 2020) “Do Your Kids Know Where to Find All Your Money if Tragedy Strikes?”