June 29, 2022
Estate Planning
· Personal Family Lawyer
How and When to Talk to Your Children About Money
Whether you consider yourself wealthy or not, you need to think about how (and when) you’ll talk with your children about money, whether they’re little kids, tweens, teens, or already adults. It’s suggested these discussions happen in three stages during a child’s lifetime.
Here, we’re showing you how each of these three stages apply to your family wealth as a whole, regardless of how much—or how little—money you have at the moment:
TWEENS AND TEENS
The tween years (ages 10-12) are a good time to start talking with your children about family wealth. At this age, the discussion should be aimed at letting your children know family wealth is not just the amount of money your family has, it also involves all of the family resources.
Time, energy, attention, and money (TEAM) are the resources that make up your family wealth. With this in mind, use one day over a coming weekend to create a Family Wealth Inventory with your tween or teen children. Inventory all of the family’s TEAM resources, along with other intangibles, such as values, insights, stories and experiences you want considered as part of the Family Wealth bank.
This is an ideal time to tell them your family’s story, talking about how you and their other relatives worked your way to the family wealth you have now, how decisions have been made from one generation to the next regarding family wealth, and how you hope decisions will be made in the future.
Around ages 10 to 12 you can also start talking to your children about how though one day you won’t be here, you have intentions surrounding what you plan to pass on to them, (beyond just money) how you plan to pass it on, as well as what they can choose to do with the inheritance they’re receiving.
Again, the inheritance they’re receiving is not just the money you’re leaving—it also involves your family genetics, epigenetics, values, ancestry, connections, knowledge and much more.
IN THEIR 20S
If you haven’t yet begun talking to your children about your family wealth, you should start now. If you’ve already begun having conversations, make sure to continue talking to them during this important stage of their life.
Once they’ve moved out of the home, they need to begin thinking about their own family wealth, including setting up their own legal documents, so if something happens to them you won’t get stuck in court or conflict. They also need to know whether you plan to offer them financial assistance during their lifetime, along with what the parameters of this assistance are and why you’ve set things up this way.
Additionally, this is an ideal time to start discussing your own plans for retirement and whether or not you’ll need any financial support from them later in their life.
If you haven’t already shared your estate plan with your children—including where to find it, why you’ve made the decisions you’ve made, and introduced them to your family lawyer—this is the time to do that as well.
IN THEIR 30S AND 40S
By their 30s, your children should be ready to be fully involved in your family wealth. This would be the perfect time to have a family meeting facilitated by us if you haven’t done so already.
You can kick-start the talk by reading from a letter you’ve written that outlines the hopes you have for your family wealth, both now and in the future. Since you’ll likely be nearing or in retirement at this stage, it’s important that you eventually discuss the actual value of the family’s wealth and detail your wishes about passing it on. At this age, you never know how much time you have left to prepare your children to effectively manage the money you’ve spent your entire life accumulating.
By now, you definitely want your children to know if they should plan to provide financial support for you. At the same time, you may want to start looking at how you can pass on what you do have during your lifetime, instead of waiting until death, so you can invest in creating more family wealth with your children together.
As your Personal Family Lawyer®, we can not only help facilitate these discussions, we can also provide estate planning strategies to help your children become creators of more family wealth, instead of people who you might be afraid will squander what you’ve created. We can help you set up structures that incentivize them to invest and grow their inheritance, rather than waste it. Contact us today to learn more.
