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Talking to Your Children About Family Wealth--Simple Right?

by Kathy December 14, 2010

Kathy Wiseman & Andrea L. Rubinfeld
Working Systems Inc.

“Nobody wants to talk about money. It’s like this big taboo always lurking below the surface.”
-Jamie Johnson, Johnson & Johnson heir

 

You should talk to your kids about family wealth. There, we said it. Does that make you want to run for the hills? Scared to talk to your kids about family money because it could impact their motivation? Uncomfortable that they might share private information with other people? Not sure what to say or where to start? Would it change your mind if you knew that talking to your children about money could be your best investment strategy yet?

Children aren’t born knowing about wealth – it is learned through observation and life experiences. They start building ideas around money from an early age and parents are their biggest influence. Why is it so difficult to discuss the subject of money and family assets? There are a few questions worth putting thought into before having the conversation. The more clarity and careful consideration you bring to a discussion, the less potential there is for confusion on the other side.

Questions to consider before starting a discussion with your children:

• What fears do you have about talking to your family about wealth?
• What do your kids currently know, understand or feel about the family’s wealth?
• How might the discussion you are planning differ depending on which child you are talking with and why?
• How did your own parents talk (or not talk) to you about money? What was the impact? Would you like your children’s experience to be similar or different?
• Does your desired approach differ from the approach your spouse wants to take?
• What concerns do you have about your kids taking on more responsibility of family assets?
• What does the family wealth mean to you? What do you hope it means to them?
• How do you define “success” both personally and at work? How have you valued your children’s “success” and life choices made to date?
• What are the questions related to money that you are not comfortable discussing with your children and why?

Where should a parent begin? Like other sensitive topics, it is important that any conversation about family assets be inclusive, factual, open-minded and inviting. With that said, your approach may vary depending on the lifestyle of an individual child, their age and a range of other factors. It is also worth thinking about the setting and timing; have this discussion in a neutral, comfortable place, and at a time that is relatively tension and distraction free. Set an ending time and attempt to end before energy runs down.

When should a parent begin? If you attempt to wait for the absolutely perfect time to talk to your kids about money, you may end up waiting forever. Difficult conversations are always challenging, but the benefits are significant. The earlier you start the discussion, the more opportunity you have to educate your children and help guide their choices. It affords you time to evaluate the results and impact. If you are already discussing money, perhaps related to a recent purchase, a request for a loan or philanthropic gift, this may be a natural opportunity to begin the conversation. However, it is just as important to discuss family wealth simply because it is on your mind and a worthy topic.

Once you are ready to engage in a discussion, asking questions is one good way to start the conversation. Plan the first talk with the attitude that it is the first of many, be prepared to listen and ask detailed questions. The goal of this first conversation is to listen and understand more about what your kids know, think and feel. By taking time between conversations, family members have the opportunity to digest facts, reflect and gather new thoughts before the next discussion.

Questions to spur a healthy discussion with your children:

• What concerns and/or confusions do you have when it comes to our family’s wealth?
• What is your understanding of our family’s financial resources and what questions do you have?
• What is your vision for your financial future?
• How do you anticipate your financial future will compare to the way you grew up? What challenges will you face (or not face) and why?
• What are your expectations regarding financial support from your parents in the short-term and long-term?
• How do you think money set aside for you should be used?
• What can we share with you at this time in your life that will help you understand our family’s wealth and help you make good financial decisions going forward?

Conversations about family wealth can be tricky but are an important step in the stewardship of family assets. To protect your family’s legacy, empowering the next generation to make financially responsible decisions is equally as important as making prudent judgments when investing the assets themselves.
 

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