How to Avoid Pitfalls in Family Financial Planning

December 15, 2017, by The Harvest Group

It’s often said that the hardest thing for families is to talk about money. This is especially the case for families with inheritance expectations, as parents want to avoid seeing their children lose motivation because of an expected future bounty. However, as we’ve seen time and time again, avoiding the conversation doesn’t make the problem go away.

The Harvest Group deals with complex family dynamics on a daily basis. We promote healthy, open dialogue to eliminate conflict before it begins. As a result, families that visit us have much less conflict than the ones that keep everything secret. The presence of a CERTIFIED FINANCIAL PLANNER™ can help put everyone on the same page and give siblings a sense of perspective when it comes to inheritance. We help families determine who is going to be the executor, and who will be assigned the tasks of Power of Attorney and Health Care Proxy. Answering these complex questions is a critical part of any well executed wealth management strategy.

Open dialogue about inheritance is about more than just money – it helps educate and instill values in younger generations. Lessons such as why it is important to save, how to reach your goals and how to plan for the future can all come out of a discussion on inheritance.

For your children, it also helps answer important questions, such as what are mom and dad going to do with the house? Where will they go if they get sick? Do they have money to pay for long-term care? What about insurance to cover the unknown? Without these discussions, kids have a lot to catch up on in an emergency. It’s important that you, and not your children, make these decisions.  

Your children also need to know where all of your assets are held and whether they need to work with an advisor to sort out your outstanding financial obligations. As a general rule, when a parent or both parents pass away, children transfer the assets to their personal advisor. Introducing your children to your advisor will ensure that your wishes and goals are properly executed once you pass away.

There are other practical reasons why you need to loop your kids into a discussion on inheritance. This is an opportune time to sort out all your healthcare and legal documents and ensure that your assets can be accessed once you and your spouse have passed away. Everything from safety deposit boxes to valuable collectibles to different accounts at multiple financial institutions and insurance companies need to be highlighted and accounted for to ensure nothing gets lost after both parents are deceased. This process also entails communicating your final wishes to your children, including funeral plans.

At The Harvest Group, we believe families need to ask the tough questions now to enable better financial decision-making in the future. Our Peace of Mind Checklist provides a full breakdown of all the important questions you and your family need to consider when planning for inheritance. By clicking the link, you can download and complete the booklet. You are also free to submit it to The Harvest Group for a comprehensive review and follow up.

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