Forty-seven percent of Americans find family financial discussions challenging.1 As difficult as they can feel, though, these conversations can be important in helping minimize stress, discord and other issues surrounding the family finances. Here, we look at four situations when a family conversation may be helpful, as well as some tips on how to have an effective, productive discussion.
Share the big financial picture
Too often, someone passes away leaving their finances in disarray, and their family members don’t have the information they need. Having earlier discussions about the family’s general financial picture can help head off this situation. This type of talk might include sharing information on what accounts exist, how to access them (and who should be allowed to do so), as well as how family wealth is held beyond financial accounts (such as art or a business).
Hancock Whitney’s Wealth Manager can help here. The online portal allows you to link all your financial accounts — even if they’re not with us — under one login. You can also store digital copies of important documents. So it’s easy for designated family members to find the information they need when they need it.
Other “big picture” financial conversations might include discussing financial goals, or identifying family financial challenges and discussing how to tackle them. Life changes — such as marriage, divorce, children moving out or moving back home, upcoming retirement or changes in income — also present good reasons for the family to talk over money matters.
Discuss estate and legacy plans
Some of the most important family financial conversations might be about estate and legacy planning. You may want to let family members know which documents you have and where to find them, such as your will and powers of attorney. You might also mention any long-term care insurance policies or other plans to manage medical expenses as you age.
How much additional detail to disclose is up to you and your comfort level. If you do discuss more specifics on who gets what, it can be helpful to explain why you’ve made these choices and how they reflect your wishes for the family wealth. For example, if you’re leaving money to a charity, this may be a chance to explain how that cause aligns with your values. If you’re leaving money for a grandchild’s college tuition, you might talk about the value you place on education.
Talk about spending habits
Conflict sometimes occurs when one family member makes a purchase that another family member thinks is excessive or frivolous. You can potentially waylay these disagreements by talking as a family about spending habits and spending decisions. For instance, you could agree on a dollar amount over which family members need approval to spend. Or you could discuss what types of purchases might require a family consensus.
Share business succession plans
If you own a business, whether or not other family members are currently involved, it may be beneficial to involve everyone in succession or exit planning. For instance, you may be able to head off tension or conflict by explaining your decisions — such as passing ownership to one of your children and not another, or selling the company. You may even gain new perspectives by listening to family members’ ideas and opinions. Plus, having a family-wide understanding of your intentions may be helpful if you pass away before you’re ready to retire or fully implement your plan.
How do you hold an effective family financial discussion?
Discussing finances may be uncomfortable for some family members and may involve talking about emotional or controversial topics. The following tips may make the conversations easier on everyone.
- Choose a private setting and a time when people are more likely to feel relaxed, not stressed, and set a time limit for the talk.
- Provide insights up front on the main topic of discussion so people can prepare and process their reactions.
- Include the “why” behind decisions or suggestions so people understand your intentions.
- Encourage open discussion. Avoid negative or disapproving tones.
- Don’t feel that you need to cover everything in one meeting. Short, regular family discussions may be even more effective than a single long one.
Many people find it helpful to have an objective third party help mediate family financial discussions, particularly on larger or more complex topics. A trusted advisor who is familiar with the family and the family finances can act as a neutral moderator and sounding board. A Hancock Whitney private banker can play this role, while ensuring that you retain full control over final decisions as well as how much information is disclosed to the family.
1 “How to Navigate Uncomfortable Money Matters with Your Family,” Michelle Fox, CNBC, posted Nov. 13, 2020, https://www.cnbc.com/2020/11/13/how-to-navigate-uncomfortable-money-matters-with-your-family.html, accessed Feb. 16, 2022
The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.
This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.
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