Periodic insights from our Investment and Private Client Teams on a broad range of investment and advice-related topics

How to Have the Family Wealth Talk

4 minute read

Published by the Private Client Team at KJ Harrison Investors

At the time of writing, we are nearing the unofficial last month of summer. Soon enough, the kids will be heading back to school or their jobs, everyone will start commuting to work again (even if only a couple of days a week now), and the rhythm of workaday life will resume. If you’re like many people, you will be trying to reap the best of summer while it lasts by spending extra time with your family, maybe up at the cottage or taking that special vacation somewhere. Yet, to the usual itinerary of eating great food, taking in the sun or the sights, or hanging out on the dock, we suggest adding one other item: having a chat with your children about money – and specifically your values and goals for money.

When it comes to financial matters, frank, frequent and open conversation is key both to facilitating a smooth transition of wealth and to maintaining family harmony. This is true for all families, but especially for those with significant wealth. For them, the “stakes” may be higher because the numbers are higher, but there’s more to it than that. Large pools of wealth can be complex beasts, involving tax, retirement, philanthropic and estate considerations that other families simply do not have to worry about. Engaging with your children about wealth lets them know where they stand, prepares them for the inevitable day when you are not there, and helps them begin planning for their own futures.

This is particularly relevant as they become old enough to understand financial basics and to think of wealth as meaningful in their lives. While good financial habits are important to instill even in young children, the best age at which to have this kind of conversation is when the kids are in their late teens or early 20s – a time when, let’s face it, they are probably looking forward to their lives outside the family fold.

Many individuals, including some of those we support as wealth advisors, are reluctant to talk about money, even (or especially) with their families. Some of this is force of habit since they have always been the breadwinner and do not want to concern their children with finances. Others might feel financial discussions, which can and should include estate plans as a topic, are in bad taste. And still others feel that talking about something as serious as money is a “downer” – and they avoid it because there never seems to be a suitable time.

But it doesn’t have to be that way. In fact, the relaxed atmosphere of summer get-togethers makes them perfect occasions to take the sting and worry out of money talk. Everyone is (or should be) in a familial mood, and there will be plenty of other things to do if the conversation gets awkward. When we’re away from the day-to-day as a family, we often can open up to our kids about our personal histories, our disappointments and dreams, our aspirations and regrets. What we’re suggesting is to make family finances part of that relationship-building opportunity.

So, what should you talk about? And how should you approach wealth discussions with your children? Here are a few ideas.

  1. Share your wealth values.

What about money matters to you? How have you thought about it over your lifetime, and how do you think about it now? In other words, think about what wealth means to you and what its purpose is. Is it important that you use it to support the community or causes you care about? Is it primarily a means to ensure family stability and provide a sound financial footing for your children as they achieve independence? Or is it a way for you and your family to

enjoy the freedom to pursue personal interests and self-fulfillment? There are no right or wrong answers here, but your children will benefit from knowing your wealth values. If nothing else, that knowledge can help guide them in developing their own.

2. Discuss your legacy goals.

We’re not suggesting that you perform a “reading of the will,” but we do recommend that you take some time to sketch out for your children how you would like your wealth to be dispersed and used after your death or when you are no longer able to look after your finances. If you have multiple children, discuss how you plan to divide the estate equitably; if you are a business owner, now is a good time to talk about your succession plans.

Also, talk about your wishes for how your wealth should be deployed when you are no longer in the picture. Obviously, your values will inform this discussion. Don’t assume that your kids will bridle at being told what to do with their inheritance. In our experience, many children find the prospect of inheriting significant wealth a huge emotional and psychological burden. Giving them guidance on how they can use it responsibly and in accordance with your wishes can help relieve that.

3. Share key details.

One of the biggest challenges to a smooth transition of wealth occurs when family members do not know or cannot find important details – banking information, contacts for advisors (legal, tax, accounting, financial), and so on. So it’s a good idea to share those details now, or at least to let your children know where or from whom they can find what they need.

4. Actively listen.

Remember that communication is a two-way street. So, don’t just talk at your children about your wealth. Instead, engage them in a conversation. Their thoughts, feelings and own goals matter, and knowing what they are can give you insight into ways your estate plans can evolve. If your kids have questions that you cannot answer immediately, red circle them and get back to them with answers later. And pay attention to body language and tone. If they appear defensive or uncomfortable, it might be time to take a break and resume the conversation some other time.

5. Discuss their participation.

Your children will be more engaged with your wealth plans if you give them the opportunity to participate. For instance, could they take part in your philanthropic activities, perhaps by sitting on a charity’s board of directors or otherwise contributing? If you own a business, are they interested in getting involved or at least learning more about it? If you envision your wealth helping your children along their way in life, find out how they see that working. (Their answers might surprise you!)

We recommend that you consider holding these conversations in a relaxed, family-oriented setting, and summer getaways can fit that bill perfectly. But even if that is not workable, try not to put off discussing wealth with your children. When it comes to wealth goals and values, informing and engaging kids now can relieve stress and uncertainty – and save you and your family from potential headaches down the road.



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