Don’t Delay Having the Talk About Family Inheritance
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Before we get into today's episode, your Money Briefing is exploring what you need to know to become a homeowner and sustain your home. You can get early access to our series, Buying a Home and Keeping It, on WSJ Special Access, available only for WSJ subscribers. Here's your Money Briefing for Wednesday, April 10th. I'm J.R. Whelan for The Wall Street Journal. Many families put off talking about inheritance, thinking that it's taboo. But financial professionals say having the conversation sooner than later can avert money tensions down the road.
No matter what your wealth is, even if you don't think there's wealth there, there could be some wealth in house, there's wealth in possessions. The main point, too, the talk isn't just about dollars and estate planning documents. It's about your family. It's about plans to give to charity, education savings, how these things are important to your family.
We'll talk to Wall Street Journal personal finance reporter Ashley Ebling after the break.
Listen at schwab.com slash washingtonwise.
The time to have the family inheritance talk is now, not when it's time for heirlooms and assets to be passed down. Wall Street Journal personal finance reporter Ashleya Ebling joins me. Ashleya, why has the topic of inheritance traditionally been taboo?
Well, it's all about death and money. People don't want to face the fact that death is inevitable. And many people are guarded about disclosing their wealth, the exact dollar amount especially. We have Statistics say that a third of Americans actually aren't planning to talk about inheritance and wealth transfer at all, but two-thirds actually have either had the conversation or have started.
What's caused that sense of taboo to break down?
It seems like Americans are opening up about all sorts of money-related things, talking about student loans or salary transparency. So it seems as if wealth transfer is next. You can already look up the value of someone's house on Zillow if you think about that, or you can see how much someone sold their business for on Google. A lot of things aren't secret, even if a family wanted to keep it secret. The information's out there.
When should families have the inheritance conversation?
The financial advisors and estate planners I talked to said really to start early. And that doesn't mean telling everything right up front, but really as soon as you think the children are mature enough. I gave an example of a financial advisor and he's working with his son. It was when he was in college, he really started telling him all about the family business and he ended up entering the family business. So as soon as he did, then the books were totally open. It's best not to have the talk at the holidays when tensions are running high. So that might be the only time for families who live far apart. And if that's the case, don't have these talks at the dining room table. It's better to be in the living room where maybe you have the opportunity to walk out.
I talked to one advisor. I talked to Lena Haas, who heads up wealth management advice for Edward Jones, and she made the point it's a conversation, not a confrontation.
But people should expect there to be some tension woven through the conversation, right?
That's inevitable. One of the points is who you're picking, multiple children and who you're picking to be the trustee of a trust or who you're picking as your personal representative for the estate. And then even especially once you start talking about dividing up assets, who gets the vacation house or who has an option to buy out the vacation house. They're all things that have to be hashed out.
How much time should families put aside to have the talk?
It's not one talk. It's ongoing. I talked to a woman in Chicago who says she's been talking to her father for decades about wealth transfer. He's in his 90s now. There's the logistics side of things, making sure all the documents are in order. I'm talking about who you name as power of attorney for financial and health care decisions while you're alive.
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