Q. I will be leaving my eight grandchildren money in trusts and have certain stipulations and incentives I decided to include. I’d like to talk to them and their parents about it, but I am not sure how to broach the topic and have an effective conversation and keep family harmony. Do you have any tips? Thanks for your help!
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A. When it comes to parents and grandparents talking openly with children or grandchildren about money, more than a third say their heirs have little or no knowledge of their inheritance plans (Versta Research). This is because many of us try to avoid uncomfortable conversations. Although it may seem uncomfortable, talking openly to children about inheriting wealth is incredibly important.
Here are some tips for having the conversation:
- Start talking about values. As a parent and grandparent, you may see money and other assets as part of your legacy, but passing on your values may be even more important to your children and grandchildren, who hopefully look up to you and the type of person you are and the type of life that you live. That’s why the path to talking about inheritance starts with you talking about the legacy you want to leave, your attitudes toward giving and social impact, and the role you want money to have in your family’s future.
- Though it may not always seem like it in our consumer culture, younger generations often have a very strong innate desire to inherit values. And the good news is that conversations about your values can open the door for financial actions you can take together.
- Use real-life experiences to prompt a conversation. Breaking the ice casually can ease some of the tension that comes with talking about inheritance.
- An example of a conversation starter can be: “I just [had a conversation/read an article/saw a show or movie] about Estate Planning, which reminds me that I wanted to talk to you about our situation …”
- Explain what your estate plan means to you: Help your children or grandchildren work through the discomfort of the conversation by sharing why estate planning matters to you. You can also acknowledge that it’s awkward — but necessary — to discuss it. “I know this isn’t easy to talk about, but I want to go over the inheritance you’ll receive when I’m gone. It’s important to me that you’re prepared when the time comes.”
- Be firm but polite, and lead with a question that shows you’re open to a two-way dialogue. If you have a plan for how they should spend their inheritance, consider gifting the money now and guiding them accordingly.
- Rather than “I’m planning to give you roughly this amount, and you’re going to do X with it,” try the following: “I’ve set aside roughly this amount for you when I’m gone. How would you feel about that?”
- Don’t be afraid to answer difficult questions. Ask and answer questions to best communicate your intentions. Explaining the reasons behind the decisions helps reduce the potential for any misunderstandings. In addition, this provides each child or grandchild with a clear picture of the financial support they will receive which may help them to later formulate their own plans.
- Provide an explanation for any restrictions. Children or grandchildren, or their parents, may become frustrated with your decision to only give them their inheritance once specific conditions have been met. They may not understand or agree with your reasoning and may feel that it is unfair. Do your best to alleviate their feelings of frustration by talking about it and including an explanation in your documents as to why you made your decisions. This will help your loved ones to better understand your thoughts and intentions.
- Do what works best for your family. You need to decide for yourself the best time to speak to your children or grandchildren about trust funds and the best way to communicate the information. The goal is that awareness of the trust should not remove the incentive for a child or grandchild to become financially independent and financially responsible.
As you can see, it’s important to communicate openly with children or grandchildren about their inheritance, and more importantly, the legacy you want to leave. For tips to foster good family communication, please read today’s Critter Corner.
Plan Ahead for Your Loved Ones
With proper planning, careful analysis of your family’s unique needs, and the help of an Estate Planning professional such as the attorneys at the Farr Law Firm, a trust could be the perfect way to ensure your children or grandchildren benefit from your hard-earned savings — without spending all that money at once.
If you would like more information about Estate Planning, trusts, and/or trust funds, please call our office to make an appointment:
Northern Virginia Estate Planning: 703-691-1888
Fredericksburg, VA Elder Law: 540-479-1435
Rockville, MD Elder Care: 301-519-8041
Washington, DC Incapacity Planning: 202-587-2797
About Evan H Farr, CELA, CAP
