By Eric Reich
My industry is filled with countless amounts of bad advice, rules of thumb that make little sense, and lots of other nonsense in general. While much of this advice is meant to be well-intentioned, like all advice, it needs to be in context. None of this advice is potentially more harmful than the phrase, “Never talk about money.”
While I can understand why this is an old saying, the lack of context is what can be so harmful. I certainly don’t advocate shouting from the rooftops how much you have or make, but it is absolutely crucial that you talk to your family about money.
We have raised an entire generation of kids who know little to nothing about money because we never took the time to talk about money with them. We don’t teach them the importance of saving, investing, budgeting and estate planning.
By not teaching our children about money from a young age, we can cause them to lose out on the most important years of saving and investing: the early years. The sooner you start investing, the sooner the miracle of compound interest begins to work for you.
If we don’t teach our children good money habits, then they can’t expect to teach their children after them. We can hold back generations of families from financial security because someone 100 years ago said it wasn’t polite to talk about money.
Not talking about money can have even more negative effects. By not talking about our money and our estate plans to our children, we can potentially set up our family for conflicts that could tear our families apart. Sadly, we see family after family come to us after a loved one has passed to help them “figure out” the estate. When this happens, we know that 99% of these cases involve a lack of communication between the one who passed and their heirs.
Imagine it’s you and your family. You pass unexpectedly, and your family has no idea what your wishes were. Worse, when they figure everything out, they have no idea why you wanted what you wanted.
Some of you might be thinking, “They don’t need to know. It’s my money and my decision.”
While that is certainly true, you need to very clearly understand that this is the exact reason that your family might be torn apart after you are gone. Communicating your estate plan with your family while you are still here gives you the opportunity to avoid potential future fights because they can now understand the why behind your plan. After you are gone, heirs can’t ask questions about your wishes. Don’t think of this as them being selfish, but rather as them trying to understand the thought process that leads to your decisions.
Going one step further, I suggest you even be open to input in your plan (within reason, of course). Some heirs don’t need or want an inheritance. By allowing them to communicate that to you before you pass, you could adjust your plan accordingly.
Imagine one of your children is financially very successful, and the other is less so. How would the one without the same resources feel if you left half of your estate to someone who clearly doesn’t need it? Can you see where hard feelings can start to form? Can you see how the heir who didn’t need it might feel guilt over the inheritance? Now you’ve put both of your heirs in an uncomfortable situation when a simple conversation beforehand could have avoided all of this.
The same goes for your stuff. Do you really know who wants what? Probably not. The reason why someone wants certain possessions is most often because they hold a particular sentimental value to them because of the memories they hold. Let heirs give input on this type of stuff before just giving away things you assume someone wants.
Communication is almost never a bad thing. That’s true for relationships, coworkers and especially families. By communicating your intent for your estate to your heirs before you are gone, you might just end up saving your family’s future harmony.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is aCertified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations.
