Sharing Your Finances with Your Adult Children

Haley Hitchman, AIF®, CPFA® |

Your finances can be a very private subject, however as we age and are approaching or already in retirement, it is important to share our financial circumstances and estate planning with either your adult children or successor trustee. According to a Fidelity Investments survey of adults between the age of 50-80, 60% had witnessed a friend or family member lose their ability manage their finances, yet only 9% believed it would happen to them. There could be several reasons your adult children may need to help with your finances and providing them with key information ahead of time will allow them to step in should they need to.

You do not need to share everything at once as that could be quite overwhelming for someone to handle and fully understand. Skip the numbers when beginning the conversation and start with what documents they need to be aware of can be a great place to start. Estate planning documents, such as a will, power of attorney and healthcare directives will give someone a clear picture of what your wishes are should you experience a decline in your ability to make financial decisions.

If you are not comfortable with any of your children having power of attorney or executing your wishes in the way you set out, you could designate a corporate or third-party successor trustee. These entities are highly regulated and experienced to ensure your estate planning is administered properly. Some appoint a lawyer or accountant they have worked with and

As conversations about assets continue, it is helpful to have a list of expenses and sources of income. You do not necessarily have to provide a copy, but rather keep it in a safe place that your children are aware of. This will allow your designated person to continue to meet your obligations if something were to happen to you or you became temporarily disabled. Providing the types of accounts and insurance policies, such as savings, retirement accounts or brokerage accounts, long-term care insurance or life insurance with cash value would be helpful should unexpected expenses such as healthcare needs arise.

Just knowing where the important documents are kept can be beneficial and reduce some of the stress that comes along with supporting someone with their finances. If you are comfortable, it is a good idea to have your adult children meet the financial professionals you work with, such as your accountant or financial advisor. Often, financial professionals have the ability to digitally store your important documents so you have a central location should the need for them arise. who is familiar with family dynamics.

Sharing information sooner rather than later can help adult children plan ahead, particularly should there be a shortfall during retirement. By continuing conversations about finances or changes in your financial situation, you will eliminate the guesswork and reduce the risk of your affairs not being handled appropriately and keeping your financial stability whole.