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En español | My husband and I have never told our adult children, now in their mid-30s, how much money we make, how much we have tucked away and how much we spend in a year. But after talking with more than a dozen lawyers, therapists and financial advisers for this article, I'm cautiously nudging us toward opening up.
The risk of them being caught unawares or without access to our funds, should tragedy befall us, is high. The risk that they will do something unwise with our financial information seems low. Plus, they might learn something.
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When a parent's finances are revealed only after death or dementia strikes, the responsibility can place a lot of stress on offspring, says Bernard A. Krooks, a New York estate planning attorney. “I see the consequences,” Krooks says. “It's terrible.” He plans on revealing his financial life to his kids when he turns 60 this year.
But there are good reasons not to tell all, too. An immature or troubled child could try to misuse your money or goad you into handing over assets you might need later. Complicated family dynamics, or just your desire for privacy, may make you hesitant to open up.
Which is to say there's no one formula for when to open your books to your kids. But the experts I talked with do have some sensible advice on the matter.
Share shortages soon
If you suspect you don't have enough money to see you through retirement, you owe it to your kids to tell them. Perhaps you will end up needing their assistance. There is no shame in that; family members have helped one another since the beginning of time. But the earlier you involve them, the more time they have to help you find more resources and make plans.
Bigger numbers should wait
You may have barely enough money to support a 25-year retirement and long-term care. But that sum might seem like lottery winnings to a 23-year-old. “I have seen it go completely bad when kids found out there was a lot of money,” says Diane Pearson, a financial planner in Pittsburgh. If you still have a spouse, each of you can manage money and you are relatively young and healthy, it's fine to tell your children you think you have enough to be independent in retirement without revealing specific numbers. By the time you are in spitting distance of 80, however, your kids or other trusted financial representative should know where your money is and how to access it.
Find the middle ground
Every adviser or attorney who has worked with older clients or estates says you should make a list of all your assets, with account numbers and any other details your heirs or caretakers will need to handle your affairs. Put that info in an envelope and make sure that your children (or whoever will be your eventual representative) know where it is and can get to it. If the information is on your computer, make sure the right people have access to the passwords they will need. By doing this, you've put off sharing the numbers but provided assurance to all that, in the moment of need, they'll have the necessary information and guidance.
Gather the kids
Decided to unveil your retirement or estate plans? Krooks and other experts suggest calling a family meeting with all of your kids present. This is especially important if you're not going to treat them equally in terms of information and responsibility. If one child has your power of attorney and will be your estate's executor, you can reassure the others that you love them just as much, but you've chosen that sibling because of, say, financial acumen or geographic proximity.
Introduce the family to your adviser
It may be good for your children to meet your financial adviser, if you have one, to get a realistic picture of your situation. When Jorie Johnson, a financial adviser in Brielle, New Jersey, was working with a couple who she thought were endangering their retirement by giving too much to their children, she suggested they invite one of those children to their next meeting. “Which one?” they asked. The one, she replied, that they planned to live with after they ran out of money. When Mom and Dad relayed this to their family, it was enough to persuade the kids to stop requesting so much help.
Ideally, talking about your end-of-life financial plan isn't the first chat you've had with your kids about your finances. “The whole life of your children, you should be talking about money with them,” says Rhonda Holifield of Prosper Financial Advisers in St. Petersburg, Florida. That makes sense to my husband and me. Today we're working on our list of assets. And as the years go on we'll be sharing more with our kids.
Linda Stern, author of Living on Your Nest Egg, has been writing about finances since 1980.