Talking to Adult Children About Their Inheritance
Do you feel uncomfortable at the thought of talking to your adult children about their inheritance? You’re not alone. In many families, the “M” word (money) can be a stressful and emotional subject.
However, delaying the discussion can create more anxiety for everyone. In this article, we provide some suggestions on how to approach the inheritance conversation with your adult children, when you are ready to do so.
Talking to Adult Children About Their Inheritance
Most parents want harmonious family relationships to be preserved after they are gone. One of the best ways to attain this is to have the inheritance talk with your adult children while you’re still around.
While you may worry that this talk will discourage your children from working hard, not having the conversation can also cause you to worry about whether your child will handle the money responsibly without some discussion with you.
How to solve this? Talk!
One method is to use an honest and upfront approach. For instance, “I’d like to tell you what my plans are and to hear your feedback and thoughts.”
Being honest and upfront is typically the most clean and freeing approach if you are comfortable initiating the conversation.
To help your children feel more comfortable, you can share your financial values and why this inheritance talk is important not only for you, but also for them to ensure that they are prepared for the windfall.
You may want to include in the conversation a discussion about what led to your wealth. Typically, the answer is through disciplined spending and investment decisions.
Acknowledging this, and that it is important to discuss this topic, will help your children understand that they are being entrusted with your hard-earned money and that they should handle it responsibly.
Security and protection are words you can also introduce to direct the conversation in a positive way.
Instead of just a surprise lump sum of cash, your children will understand that they are also inheriting the values and opportunities that come with it.
On the other hand, if a direct, honest and upfront approach seems like a declarative statement, you can also start with a question. For instance, “I’ve set aside X amount of money for you for if something were to happen to me or if I have passed. What are your thoughts?”
While seemingly the same, this approach introduces a two-way dialogue between you and your child.
Keep in mind that if you are not comfortable specifying the dollar value of your inheritance, adult children usually have a general idea.
It can be helpful to provide an example of its magnitude—for instance, “it may be able to cover the cost of XXX, but it could not cover the cost of XXX” to make sure everyone is on the same page, whilst highlighting that the final asset values can fluctuate depending on several factors including the market value of investments and your future medical or long term care expenses.
The Bottom Line
If you’re planning on leaving an inheritance, we hope the above suggestions and tips can help provide your (and your children) a more comfortable environment in which to start the conversation and ideas for guiding the conversation when it takes place.
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Visit our website at www.bloominvestmentcounsel.com to learn more about our actively managed, customized Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.
Established in 1985, Bloom Investment Counsel, Inc. is a Toronto-based independent, privately-owned boutique investment management firm with experience in managing in excess of $2.5B in assets over the years.
We provide actively managed, customized Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions and trusts.
For more than 25 years, we have specialized in one thing and strive to be the best at it—investing in income-generating investments, specifically dividend-paying stocks.
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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.