Talking to adult children about financial planning

Talking to adult children about financial planning

As it’s Talk Money Week, we thought we’d look at the importance of discussing money matters with your family. Talking to adult children about your financial planning aims might seem challenging. It’s a subject that people often put off because conversations can veer into difficult topics such as end of life. But it can be beneficial to involve the whole family.

Important money conversations

Money discussions can be stressful in some families, especially when younger adult children are trying to build their own lives. But once they are grown up and earning salaries of their own, it is wise to bring them in on important financial planning decisions. As adult children grow older, they may become concerned about your financial well-being and any plans.

Explain your lifestyle choices and retirement plans and try to encourage open discussions about your aims and aspirations. Help your children understand your current financial situation and what you would still like to achieve in your life. But it’s not just about money, it’s about your family’s financial well-being and the ability to make important decisions.

Lasting Powers of Attorney (LPA) is one area which must be discussed with adult children in case you lose mental capacity. This could be due to an accident, stroke or a condition such as dementia. Parents usually appoint their adult children as their attorneys, giving them the ability to make important decisions on their behalf, should the worst happen. There are two types of LPA available: Property & Financial Affairs and Health & Welfare.

Once appointed as attorneys, if you were to lose capacity, your adult children would be legally allowed to manage your affairs. The financial LPA would enable them to manage your finances, such as bank accounts. The other LPA would enable your children to decide on your health and social care, such as choosing a care home.

Financial planning meetings

One way to start having conversations with your adult children is to invite them to your financial planning meetings. Generational planning can be very useful as it enables financial planners to talk through every aspect of a family’s estate.

Once your adult children understand your situation, possibilities, and ‘what if’ scenarios through cash-flow modelling, they may wish to input. Open dialogue can encourage wider conversations about financial planning, as well as the impact of tax and other pressures.

Your adult children may consider aligning your financial planning strategy to their own, resulting in a secure outlook for everyone.

Inheritance matters

Unless it is contentious, let your adult children know what is included in your estate, especially if they’re named as executors on your Will. A full understanding of estate matters will make things easier when they come to administering your estate. Make sure they know how to get a copy of your Will, if you haven’t provided them with one.

Discuss any strategies around inheritance tax (IHT) and how you have planned to minimise any tax liabilities. Such conversations might lead to your adult child wanting to reflect on the future tax liability from your estate when it is added to their own estate value.

Prepare a list of accounts and relating financial companies so they have everything to hand when the time comes. You may have set up trusts or Will-based trusts, where adult children have been named as trustees. By involving adult children in your inheritance planning, you can help them to prepare in advance for both your legacy and their own.

Wealth Management, Nottingham and Lincoln

Balance: Wealth Planning believes financial education should start early in people’s lives. Discussing your financial plans with adult children will help them to plan ahead for their own futures. It can also be beneficial to explain matters to young people too. Helping children to learn the practicalities of budgeting and how to plan their finances could help them get a head start in life. The sooner you start your financial planning, the more you can achieve.

Our financial planning team are experienced in wealth management for every generation. It’s our aim to help you protect your legacy to ensure your children and grandchildren benefit from your estate. Based in Nottingham and Lincoln, we can talk you through any key points you need to consider, and we’ll help you create a financial plan.

When did you last review your estate value? Get in touch to speak to our financial planners.