My name is Evan Vladem, and I’m a partner and financial advisor at Associated Investor Services. I get it... talking about money can be intimidating... So, we created a judgment-free space where there are no "dumb" questions or embarrassing situations. Everything and anything is welcome, and we'll provide our best answers and/or guidance.
Feel free to submit questions or letters directly to me VIA EMAIL HERE. You have my word, your identity will remain anonymous to our readers.
Dear Evan,
My spouse and I have built a significant amount of wealth over the years, and we're wondering—should we tell our children about our wealth and their future inheritance? We're concerned about how it might affect them, but we also want them to be prepared. What’s the best approach?
-Curious Parents
Dear Curious Parents,
This is a great question and one that many families face as they plan for the future. At our firm, we work closely with families to help them successfully transfer wealth to the next generation while minimizing any confusion or stress.
Whether or not to tell your children about your wealth is a personal decision, but here are some important factors to consider:
1. Timing and Maturity
When considering sharing this information, the age and maturity level of your children is key. While you don’t need to reveal everything at once, starting with age-appropriate discussions about money can be beneficial. By the time they reach adulthood, it’s generally a good idea to have more detailed discussions about their potential inheritance.
2. Preparing Your Children for Responsibility
One of the concerns parents often have is how knowledge of wealth might affect their children’s motivation or sense of responsibility. This is where early financial education becomes important. Open discussions about the value of money, hard work, and responsibility will help prepare them for the responsibilities of managing wealth down the road.
Involving children in conversations about financial decisions, such as budgeting or small investments, is a great way to ensure they are equipped to manage an inheritance wisely.
3. Transparency Reduces Confusion
We’ve seen firsthand how important transparency is for families. When beneficiaries are aware of the overall estate plan, it can reduce misunderstandings and prevent potential disputes later.
At our firm, we often encourage families to involve their heirs in estate planning meetings when appropriate. This fosters a sense of involvement and ensures everyone understands their role in the plan.
4. Gradual Disclosure
You don’t have to lay everything out all at once. You can start by sharing basic information about financial values and gradually disclose more details about the estate plan as your children mature and demonstrate readiness.
5. Aligning Inheritance with Family Values
It’s not just about the money. Many families want to ensure their wealth aligns with their values, including how they hope their children will use their inheritance.
Some families choose to involve their children in philanthropic efforts as part of this process, helping them understand the importance of charitable giving and responsible stewardship.
Next Steps: Family Planning Meetings
We often host family planning meetings, where we sit down with parents and their heirs to discuss the estate plan, often times in tandem with their estate planning attorney, making sure everyone is prepared for the future. These meetings ensure transparency and help avoid confusion later on.
We also encourage trusted contact meetings where we ensure the next generation knows where key financial documents are and who to contact if needed. This reduces stress for heirs during difficult times.
There’s no perfect time to have this conversation, but starting early, educating your children about financial responsibility, and gradually increasing transparency will go a long way in preparing them for the future. If you're looking for guidance, we're here to help facilitate these discussions and provide the tools to ensure a smooth wealth transition.
Have a question for the advisor? Submit it HERE, and you may see it featured in an upcoming blog post!
Best regards,
-Evan Vladem