Have you had "the talk" with your adult children? You know...the one where you discuss what will happen after you are gone.
For many, talking about death is very difficult, if not impossible. For many families, discussing money and inheritances is even more difficult.
Why to start the conversation
Many parents avoid discussing family wealth for a number of reasons:
- Talking about money is taboo.
- They worry the knowledge of large inheritances will remove their motivation to seek meaningful careers.
- They are afraid of dampening their children's ambition or good work ethic.
Maybe you wonder if your children can handle large amounts of money, or you haven't decided how much to leave them.
While you may want to wait until your children are older, waiting too long can leave them unprepared. Just as you wouldn't give your 16-year-old son the keys to your BMW without teaching him to drive, you don't want him acquiring a vast sum of money without knowing how to handle it.
Preparing your children for inheriting wealth
A recent New York Times article discusses various ways wealthy individuals and couples prepare their children for the millions of dollars they may one day inherit. Knowing too much can be a burden, even to young adults. Most suggest providing information to children gradually as they age, building up to a full disclosure of the amounts they may receive at your death.
Some of their techniques include:
- Ask young kids what they would do if they suddenly received a lot of money. This can help you gauge where they are in terms of dealing with money. It can also allow you to start conversations about fiscal responsibility, charitable giving and your family values.
- Tell your story of how you acquired your wealth. Learning how hard you worked to get to where you are will help them understand that making, investing and saving money is not easy. This also provides them with a model to follow.
- Involve your children in charitable giving or the investment process - maybe by using a fund you have established for them. This will also help them understand how investments fluctuate.
- Help them map out their own financial plans as they prepare for college, their first jobs and their first home purchases. This hands-on experience can provide you opportunities to show what you've learned and how best to handle money.
- Set up a one-on-one conversation with a trusted estate planning attorney for each child as he or she turns 18. This gets them thinking about what their estate planning needs will be as they marry, divorce, have children and purchase homes. As they think about how estate plans will apply to their lives, they will have a better understanding of the thinking process behind yours.
Families differ, and your approach should be tailored to your children. Tales of woe are told about people who win the lottery and later wish they'd never won. Don't create the same scenario for your children.
Doing something is better than doing nothing when it comes to preparing your children for multi-million dollar inheritances. If you haven't done so already, learn how the family of Bulletproof Trusts™ can put a speed bump or three on the "inheritance highway" your children and grandchildren will travel down over time.