Tips for Family Wealth Transfers
Money conversations between parents and adult children are difficult at best. Issues such as investments,
are never easy.
A lack of communication and planning can be costly to the family in terms of taxes and other issues
involving transferring parent’s wealth to the next generation and making sure they are cared for properly in
old age. While this might sound like it only pertains to the very wealthy, that's not quite the case.
Family money conversations are important and a trusted financial advisor can be a help in
facilitating and moderating these family discussions as well as in guiding them through the entire estate
4 Key Ground Rules to Having Successful Family Money Discussions:
- Initiate family discussions early.
- Don’t be shy about bringing up detailed questions.
- Let parents have the final say about their finances and care.
- Have follow-up conversations.
This is about fully understanding the parent’s goals and objectives for retirement. Parents should have an
idea of what they want out of retirement, a vision for their lives. Children should be prepared to discuss
any concerns about these plans. If the parents, for example, are planning to retire abroad how will the
family get together and who will care for them in the event of serious illness?
This entails knowledge of the parent’s financial situation. Parents should have a handle on all sources of
retirement income, an estimate of the expenses associated with their lifestyle and details of how they will
handle retirement healthcare expenses. Children should help parents test drive their plan to see if it's
feasible because leaving an inheritance to children can be easier said than
This is about having the parent’s estate planning documents in order and up to date. Parents should make
decisions about their care in the event they become incapacitated. Who would care for them? Who would
have powers of attorney over their assets? Who is the executor or trustee of their estate in the event
of their death? From the children’s point of view, they might suggest that the best family member handles
each of these tasks. Factors might include physical proximity to their parents and who is best in dealing with
It is important that everyone knows where key documents and papers are located. Parents should make a list
of their key documents and papers and where they are located. Children can help their parents determine what
documents are in place and which may need updating or creation.
The Role of the Financial Advisor
Financial advisors can help clients plan for intra-generational wealth transfers in a number of ways. Adult
children may have questions about how to approach the topic with parents if their family is not in the habit
of having open family money discussions. A financial advisor can help them understand the issues involved
and some of the questions to ask. They might also suggest some icebreakers to help the children open these
difficult discussions with their parents or other older relatives.
For parents, a financial advisor can be a great sounding board for their ideas about wealth transfer. Who
do they want their money to benefit? Do any of their children have special needs that must be addressed in
terms of funding? What do the parents want out of retirement? What are their feelings about long-term
care? Do they have long-term care insurance or have they made other provisions to deal with these expenses?
A financial advisor can also be the perfect person to help moderate and facilitate a family financial
conversation. As a disinterested third party, they are detached from the emotional issues that are inherent
in these types of conversations. As experienced financial professionals who have seen a number of different
family situations, they can offer ideas that the parents and the family may not have considered.
Lastly, most financial advisors have encountered adult children whose goals seem more about their own
financial well being than that of their parents. At the end of the day, the wealth transfer discussion
should be first and foremost about making sure that the parent’s or older relative’s needs and desires are
met before worrying about the next generation. This includes their retirement goals and that proper care is
provided for their later years. The advisor can help prevent the goals of seemingly greedy children from
negatively impacting their parents, sometimes through
a revocable living trust.
Family financial discussions are never easy, yet they can be vital to properly executing the parent’s
wishes in terms of the eventual transfer of their wealth to the next generation. A financial advisor can
help both generations through this difficult and emotional process in a number of ways.