Making Cents: Family Talks About Money
By: John P. Napolitano, CFP®, CPA, PFS, MST
Discussing money with family members isn’t one of the easier conversations to have– especially when gathering for a holiday or family event. Nevertheless, these conversations are important, and should be had if you are looking to be helpful.
This talk should happen with family members that you care about. Let’s start up the family tree with parents. It’s common for older generations to avoid discussing money. But these are the questions that should be asked, regardless of their willingness to answer.
Ask if their estate plan is current. Don’t be shocked to learn their estate plan may be as old as they are.
Ask if you have any roles to serve in the settlement of their estate(s), such as trustee, health care agent, or personal representative. 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 current plan.
If there is a business interest involved, ask about the succession plan and who owns that business after the passing of the owner. Determine if the agreement is in writing, funded, and still relevant based on the current condition of the business and the people that may be left behind to run it.
Ask about cash flow and if they feel at ease living their life dreams from a financial standpoint. Inquire if they’ve got a bucket list. Common amongst those nearing retirement is an ingrained mentality of not spending. Many don’t realize they may be able to afford and accomplish some of their bucket list items.
On to siblings– it’s ok to discuss financial issues you may have in common. For siblings with minor children, ask if they’ve appointed successor guardians in the event of their pre-mature passing. Don’t be surprised if your sister reveals that you are their undisclosed choice or that they 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 kids 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, but many do have dependents and a young spouse. Imagine this, a young parent with $1million in life insurance passes away and that money goes directly to the young surviving spouse who remarries quickly and then gets divorced, splitting that money with their ex, and not your grandchild. A better solution is a trust for the benefit of a young surviving spouse and your grandchild, disinheriting any potential new spouse number two.
John P. Napolitano CFP®, CPA is CEO of US 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. Please consult your legal advisor regarding your specific situation.
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.