Help Your Family Help You

When our children are young, we may do our best to keep them from thinking about the family finances. When money is tight, we don’t want them to worry. When times are good, there’s always the danger that they won’t learn the value of a dollar.

But there comes a point when family members need to be made aware of the financial details. Even so, 42% of baby boomers admit they have not shared the details of their current financial situations with their adult children.¹ And it’s likely that many boomers haven’t had similar conversations with their own parents.

Obviously, most of us prefer to keep our personal finances personal, but opening a discussion about family finances could help prevent headaches and woe when difficulties strike.

They may be wondering. One in three adults between the ages of 46 and 64 has helped a parent with financial matters, so it wouldn’t be unusual if your kids are wondering whether you’ll need their help.² They have their own retirements to consider and their own kids to support, so the more information they have about your situation, the less uncertainty they may face as they prepare for the future.

Is everything in order? If you were to die or become incapacitated tomorrow, would your family know how to manage your finances or ensure that your spouse would not be in a financial bind? It’s a good idea to let your adult children know whether you have a will, a trust, powers of attorney, medical directives, and insurance policies. They need to know where to find such documents and also what’s in them. Potential conflicts might be prevented if the family knows how you want to be treated for a terminal illness and how you intend for your property to be distributed.

Head off future family problems. If one of your children appears to be the most likely candidate to look out for your finances, it’s a good idea to make sure the rest of the family is aware of your selection. When the time comes for your chosen financial caretaker to step into a potentially difficult role, his or her responsibilities may be easier to bear with the family’s support.

This isn’t a one-way street. Your adult children could become indisposed due to an illness or emergency and require your help to manage their finances. Whether you are the parent or the child — or both — a good way to open this potentially uncomfortable discussion is by sharing your information with the other parties and then asking them if they would be comfortable doing the same.

1–2) Money, January/February 2010

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2010 Emerald.