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The Last Money Taboo?
By Rick Kahler CFP® http://www.KahlerFinancial.com
Talking about money is taboo in the US. If you don’t believe me, next time you’re at a social gathering ask everyone these two questions:
1. “What was your taxable income last year?”
2. “What is your net worth?”
Well, it’s not a recommended way to make new friends.
The Money Taboo
The taboo on money conversations can cause real difficulties when it extends to families. My experience as a financial planner suggests most families in the US have a “no-talk” rule around money. While a lot of family members know each other’s earnings, fewer know family members’ net worth. Even fewer have asked about their parents’ estate planning.
Many don’t intend to ever ask. A blogger who calls himself the Financial Samurai wrote: “I never want to have the inheritance talk with my parents unless they initiate the conversation.”
Based on the responses to his article, he isn’t the only person holding this opinion. Most children recoil at even the thought of asking their parents about the particulars of their estate plans.
None of My Business
In my experience, the most common reasons for not talking to parents about their inheritance plans are these: “It’s none of my business,” “I don’t want them to think I am greedy,” and, “It will ruin our relationship.”
Why Not Ask?
Let’s look at each of these reasons:
1. “It’s none of my business.” It’s true that parents have no obligation to disclose their finances and estate plan to their children. Yet it could quickly become your business if you are named as an executor in their wills, a successor trustee in a trust, or an agent in their powers of attorney. Asking whether you are designated as any of these roles is totally reasonable. If you are, then knowing the particulars of their estate plan and finances would be helpful for you to know. It is such a reasonable request that, if your parents are not willing to discuss the details, you may be best served asking them to name someone else.
2. “I don’t want them to think I am greedy.” If you’ve had your hand out to your parents most of your life, asking them how much you’re going to get when they kick off may not evoke a loving response. However; if you have never asked your parents for money – or – if you have asked for money and have paid them back; then you probably don’t have much to worry about! If you approach the topic from the standpoint of wanting to be fully prepared to carry out any duties bestowed upon you, I seriously doubt your parents will suddenly think you’ve morphed into a greedy, money-sucking leach.
3. “It will ruin our relationship.” One of the strongest money scripts around talking about money is that doing so will permanently harm a relationship. The Financial Samurai wrote, “I hate thinking about money and family because so often money tears relationships apart.” While money issues can certainly tear apart a relationship, so can abusing alcohol, sex, drugs, work, power, and a host of other things.
Assessment
What I’ve seen is that keeping secrets about money is more harmful to relationships than talking about money. When the no-talk rule is in effect, family members make up their own stories about what is real. Those stories are rarely true, and the assumptions around them can cause misunderstanding and mistrust.
Being the first to break a family’s “no money talk” rule isn’t easy. Yet having the courage to start money conversations can be a service to the whole family. In my experience, it ultimately leads to better estate plans, more trust, and stronger relationships.
Conclusion
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Filed under: Estate Planning | Tagged: Estate Planning, estate tax, inheritance |
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Follow-Up,
When it comes to children and money, it’s my experience that parents from a variety of backgrounds and income levels want the same thing: for their kids to be successful and happy. While families might have different definitions of “success,” the underlying aim is very similar.
Whether our kids are toddlers or adults, we’d like to help them do well. The challenge, of course, is learning how to be effective parents. One of the areas where many parents struggle is teaching children about money.
A useful resource for helping children build empowered relationships with money is a book called Intentional Wealth, by Courtney Pullen. While the book is primarily aimed at wealthy families, much of its advice applies to families at all income levels. I have participated in several workshops with Courtney, a psychologist and coach, and I appreciate his positive and common-sense approach. That supportive style is fully evident in his book.
Here are a few of the strategies from Intentional Wealth which can be used by any family that wants to help future generations thrive:
1. Define and clarify the family’s purpose and values. Every family has its own culture, expectations, and values. These are not necessarily put into words—in fact, quite often, no one talks about them—but they are there. Successful families spend time and energy defining them.
2. Learn how to do intentional financial parenting. Like so many other aspects of being parents, this isn’t something most of us are prepared for. No matter whether we grew up in poverty, wealth, or somewhere in between, we don’t necessarily know how to teach kids to use money well. Courtney offers some practical tools for raising children with a sense of responsibility and balance rather than entitlement. His advice on how to prepare adult children for financial responsibility is also helpful.
3. Encourage clear communication. This, of course, means much more than learning how to talk about money. Again, Intentional Wealth includes some useful tools and resources.
4. Foster a sense of gratitude and stewardship. Stewardship is defined not merely in terms of giving but also as “responsible management.” The thoughtful discussion in this book would be especially helpful as an estate planning resource.
5. Get help when it’s needed. This includes working with financial advisors, but also seeking out help from counselors, support groups, and other appropriate resources.
6. Understand that a family’s resources and value are made up of much more than money. What Courtney calls Family Net Worth includes “the intelligence, talents, skills and knowledge of each family member; the social networks and influence of family members and the family as a whole; and the family’s reputation.”
The families and individuals Courtney describes in this book are in strong contrast to the perception of wealthy, successful people as “greedy and selfish.” Instead, they are people with a strong sense of responsibility for both their financial and non-financial legacies. No matter what its financial net worth may be, any family can foster this mindset to help its members succeed.
The advice in Intentional Wealth can be summed up in these words from its concluding section: “Families that flourish do so because they manage the family’s financial and non-financial resources with attention and intention. This kind of success means much more than maintaining the family’s financial legacy or enjoying prosperity. It means passing on purposeful legacies of value, empowerment, family connection, and stewardship.”
This book emphasizes something I have learned through years of working with a variety of clients: money is not important as a goal in itself. Its real value is as a tool to support people’s dreams.
Rick Kahler MS CFP®
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