Making Cents: Family and Money Make for Interesting Conversation
By: John P. Napolitano, CFP®, CPA, PFS, MST
Family and money are not the easiest conversations to have – especially when gathering for a family occasion or holiday. Nevertheless, these conversations are appropriate, and should be had if you are curious and looking to be helpful.
This conversation should happen with family members that you care about. Let’s start up the family tree with parents. Sometimes older generations don't want to talk about money at all. But these are questions that must be asked, regardless of their willingness to answer the questions.
Do they have a current estate plan? Don’t be surprised when learning their estate plan may be nearly as old as they are.
Ask if you have any roles to serve in their estate settlement such as the health care agent, trustee or executor. If yes, then you have the right to examine the documents to better understand your role. This also provides opportunities to revise or improve upon the plan currently in place.
If there is a business interest involved, ask about the succession plan and who owns it after their passing. Find out if that agreement is in writing, funded, and still relevant based on the current condition of the business.
Ask about cash flow, and whether they feel comfortable living their life dreams from a financial perspective. Probe a little deeper and ask if they’ve got a bucket list. Also common amongst elders is an ingrained mentality of not spending. We find many elders don’t realize they may be able to afford and physically accomplish some of their bucket list items.
Moving on to brothers and sisters – it’s ok to raise some financial issues you may have in common. For siblings with minor children, it would be nice to ask whether you have any role in the guardianship of those children in the event of the parents’ pre-mature passing. Don’t be surprised however, when your sister looks you in the eye with that vacant stare of “we haven’t done anything".
The last line of questioning is with your children. Children with the most to lose are young adults with minor children. The important issues for your children are guardianship of their minor children, the amount of life insurance owned on each parent, and the type of estate planning documents they possess.
Many young adults don’t have much of an estate. What they do have are dependents and a young spouse. Imagine this, a young parent with $1 million in life insurance passes away and that money goes directly to the young surviving parent who remarries within 3 years. A better solution to ensure that this money goes to the proper place is a trust for the benefit of a young surviving spouse and your grandchild, disinheriting any potential new spouse number 2.
John P. Napolitano CFP®, CPA is CEO of U. S. Wealth Management in Braintree, MA. Visit JohnPNapolitano on LinkedIn or uswealthnapolitano.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.