‘Tis the Season…to Talk Family Finances?!

fortpitt in Wealth Management 16 November, 2015

The holiday season is upon us – families will gather from near and far, elaborate dinners will be enjoyed, and, for those adventurous enough to venture out in the wee-hours of the morning, Black Friday shopping traditions will be upheld. Thanksgiving, and the subsequent holidays that follow, typically mark a time of togetherness, and for families, it may be just the right time to talk about something important…their financial plans.

The holidays are a fantastic time to take advantage of everyone being together to have wealth management and estate planning conversations. And while they don’t necessarily have to be uncomfortable chats at the dinner table, it could be one of the only times per year that extended family members are together. Having such conversations – mainly between grandparents, parents and adult children (where appropriate) – is a two-fold strategy. First, any pre-planning reduces anxiety and ensures that everyone is on the same page about financial wishes and desires. Second, by having all of your “ducks in a row,” family members can avoid the treasure hunt that will ensue if an untimely passing does occur.

Avoid major mistakes

We find that when families avoid these conversations altogether, and someone passes away, the family doesn’t know the next steps and make already difficult decisions under added stress. Additionally, members run the risk of forgetting about assets (which will ultimately be awarded to the state if they are not claimed) or earmarked funds that were otherwise not highlighted by the now-deceased. We recently heard a story about a family that didn’t know there was $20,000 put aside for funeral arrangements, and blindly went about pulling the resources from each sibling to cover the costs. Finally, by not talking about such plans, at least annually, families miss out on the opportunity to deepen their relationship and have everyone on board with other member’s ultimate wishes and desires.

What should we talk about?

Depending on family dynamics and the sensitivity to certain issues (for example, inheritance discussions can be more risk-oriented than say, burial wishes), set a time in advance to chat so that everyone can come prepared and not be blindsided by the conversation. Consider also incorporating your advisor into the mix, since he/she can act as a moderator and unbiasedly direct the meeting. Below is a starting point of some of the things that different generations should be open to chatting about:

Estate planning documents

Living will: Especially the do’s and do not’s of DNR instructions and other final care wishes.

Regular will: Any Power of Attorney requests or instructions that family should be aware of?

Funeral and burial plans

Service requests: Desired location, burial vs. cremation.

Costs: Are pre-paid policies already in place with the desired funeral home?

In-home care or living arrangements

Will older generations prefer to remain independent, have in-home care, or are they open to a desired assisted facility? Do they prefer to live with adult children?

Financial contact list

It’s beneficial to have a collection of names and contact information for all financial professionals that someone is working with. This includes an attorney, accountant, wealth advisor, and investment information as well (where assets are held, statements, life insurance policies). Especially for spouses, it’s important to gather all log-in and passwords to digital accounts that may need to be accessed.

By meeting annually – whether it’s during the holidays or at another point in the year – all generations are on the same financial page. Having multiple generations discuss the financial elements at hand will reduce stress and anxiety down the road, and ensure that everyone is happily moving forward together with familial financial decisions.

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