...it can be a difficult but necessary conversation.
Talk to family about your Will
Over the past few blogs, we've been discussing how important it is to talk to parents and adult children, if you have them, about what financial arrangements are in place, should the worst happen – either to them or to you.
As I mentioned, I successfully navigated this very difficult conversation with my own parents.
But when my father-in-law asked me what would happen if he couldn’t make financial decisions for himself, I hesitated.
It was shortly after my mother-in-law passed away, and we were still in mourning.
I suggested waiting for a calmer time to have the discussion.
Money, inheritance and wills...
Despite the best of intentions – and my professional background – the conversation felt very uncomfortable.
So what is the right way to initiate a discussion with your family about money, inheritance and wills?
How can you overcome the awkwardness, and make sure these conversations do take place?
Right time, right people, right words...
First of all, as above, timing is everything.
There is a natural tendency to bring these issues up when everyone is together anyway – perhaps over Christmas or a joint holiday.
This can sometimes be a mistake, because these big family occasions are usually charged with emotion – both positive and negative.
Consider picking a quieter, less sensitive time to speak in person, even if it means making the trip specially.
And don’t spring the conversation on anyone as a surprise. This is an awkward conversation – you don’t want them to feel ambushed. Give them some warning, telling them in general terms what you intend to talk about.
Next, pick your audience carefully.
If you are a parent who is initiating a conversation about your own finances with your adult children, speak to them each individually before gathering them as a group. That way, any individual issues can be ironed out privately first.
If you are an adult child who wants to initiate the conversation with your parents, it may be appropriate to have a quick conversation with any siblings first.
Power of Attorney
Whether or not your parents have a Will, who they designate as their Power of Attorney, who they choose as their beneficiaries, the plans they have in place to minimise Inheritance Tax – these questions potentially affect you all.
Be careful what you say. This is the tricky bit because after all, it’s a difficult conversation…
Often, our clients use us as the pretext for the discussion.
So, for example, a parent might say to an adult child: “We’re doing some financial planning with our financial adviser, and they’ve asked us to think about a few issues…..”
Or an adult child might say to a parent: “We’ve been doing some estate planning with our financial adviser, and the conversation got me thinking. Have you been through a similar process?”
In most cases, both “excuses” will have a root of truth, because we will look at the financial issues around inheritance, end-of-life care and so on in our first meeting with every client, and then revisit them annually.
And it’s a relatively unthreatening way to start the conversation.
You should also make sure that if you are an adult child enquiring about your parents’ financial arrangements, you keep the focus on their welfare. Do they have arrangements in place, for example, in case they can’t make financial decisions?
Clearly it would be best not to ask, “Mum, Dad, how much are you leaving me?”
You might be really curious. You might even genuinely need to know for the sake of your own financial planning. And those details might emerge naturally during the discussion.
But focusing on your inheritance will shut down the conversation – which doesn’t help anyone.
Whilst we are not family therapists and cannot be the conversation facilitators, we can help explain why you made certain financial decisions regarding your estate, or answer questions from adult children or parents.
And of course, we can help ensure you and your loved ones have solid financial plans in place, in case the worst happens.
Finally, accept that sometimes your family members do not want to talk about their finances.
This does not mean you should drop the subject forever. As I mentioned in my first blog, making sure you have discussed with your family what happens to your money when you pass on is simply too important.
But you might have to return to it another time, taking another approach, or have a series of small conversations – perhaps over months or years – rather than discussing all the issues at once.