At what age do you share detailed financial information with your adult children?

Parent Cafe
41

I always felt financial lessons should be modeled, not lectured. I didn’t share as much detailed info with S1 and S2, because there was an ex-H involved. Beginning early 20’s I made them much more aware. D has always been interested and we shared info.
They know where the accounts are, value of the real estate, where to find all of the info. They do not know how much is in the retirement accounts.

I taught my kids to be so frugal and always ask “if it was a need or a want”. It’s fine to buy a “want”, but I do think it’s important to recognize the difference. @Youdon’tsay I didn’t factor in, at all, what would happen when they got wives who had a lot of debt and/or very different spending priorities. It’s been eye-opening.

42

@sryrstress it has been interesting to think about. Both of my kids also are frugal and have excellent credit scores. This weekend, they are moving in together as ds1 and his gf relocate to ds2’s city. I was dying to know the gf’'s credit score, but ds1 didn’t volunteer it as he did his own, which prompted ds2 to follow suit (the beauty of sibling rivalry!). The gf didn’t have a job until two weeks ago, and I asked whether that was a concern in terms of making rent, and ds1 volunteered that she had a cushion from a “small inheritance” from a grandmother. Hmmmm. What is small? $5k? $50k? I, of course, didn’t ask, but I sure wanted to!!!

43

^^They’ll figure it out.

Another thing to put on the ‘list’ is to watch the state refund program for about 4-5 years for your name. My friend’s mother died about 10 years ago and about 5 years after that her mother’s name started showing up on the Great Colorado Payback list. There was a bank account or 401k or something that had been missed when the original estate was settled. It was worth about $10k and it took some work get it. The original attorney had closed his office, the probate had been closed, so they had to reopen it to get the correct papers to get the money released to her.

Her brother died last week and they have NO idea if he had any bank accounts or money in trusts. He’d been living on the street for years, but before that he worked internationally as a broker so there might be some old accounts, pensions, etc. They have to start the search and watch the payback list.

And another little warning. This friend and another both had a parent die, and the lawyers handling the estates were from small towns, and OLD. MANY mistakes, missed documents, lost funds. The attorneys were fine in drawing up the wills but really didn’t know how to deal with an estate. This ^^ friend’s mother had a modest estate and all 3 kids were very cooperative on selling the house and splitting everything. The other friend was an only child and her parents owned a farm worth several million. She called asking me questions and I referred her to my friend, an attorney and CPA and said he’d be honest with her about what the old attorney was doing. She called me back about 20 minutes later and said “We’re switching to Ed!” Sure, Ed cost more but they were dealing with millions of dollars. Get a good lawyer if you have assets worth protecting.

44

@“Youdon’tsay” - I get wanting to know. Ds is fairly frugal as are we. I truly hopes he marries someone who is financially responsible.

This curiosity/concern goes somewhat to the question of estate planning. Ds, to my knowledge, does not currently have a SO. He certainly didn’t four years ago when we updated wills as he was only 18 then. I have wondered what/how to structure things should something happen to both of us. I truly would trust ds not to be a spendthrift. Last time we re-did, the attorney said (more than once), “It’s not your son you have to worry about - it’s the girlfriend.” What we currently have structured really would not become his until age 35, per the attorey’s advice. The idea of trustee fees eating up some of that money bugs me, but that non-existent worrisome girlfriend looms in the back of my mind as well. So, we are working through that as well as we plan our next update.

45

A corporate trustee rarely makes sense unless the beneficiary is inheriting at least a 7 figure sum.

46

You can’t control everything from the grave, you have to trust the son and the future spouse. You’ve done your job in teaching him about money, now you have to let go. If he spends it all on fluff and has nothing left, he’ll have to work all the days of his life (same as a kid who gets not inheritance at all).

Why can he not have it until he’s 35? Will he not need a house or living expenses between now and then? Would he make poor decisions and spend it all on trips and cigars? If so, is there a reason he wouldn’t do that at age 35? If so, why not tie up the money until he’s 50 and may need to send children to college?

47

@Hoggirl – Can you explain this sentence? “The idea of trustee fees eating up some of that money bugs me,”

Would you be paying a professional to disburse the funds at certain age points? Is that not the role of the executor? (Clearly I need to see what I set up a few years ago. when I rewrote my will. I know that the money is distributed in thirds every five years, but I didn’t anticipate fees.)

48

Are there reasons NOT to tell your adult children about one’s finances?

Yes. Some people have kids that would take advantage of the information. There such people in the world, and they are someone’s children. They can even be one of ours.

Or they cannot handle it and if does more harm than good. It’s not an auto-answer. You have to evaluate your situation.

What’s important for anyone is to have your finances in good shape with good records so that someone can take over with minimal effort if needed.

Maybe dementia is not in your genes. But car accidents, unexpected health issues can come at any time and the chances increase as you get older. It can cost you and your heirs, causes, whatever a lot of money if you don’t have things set up for such contingencies.

49

@CT1417
Trusts can be set up such that distributions are made at the discretion of the corporate trustee. Reasons for this can be to avoid or minimize estate and inheritance taxes, to keep assets protected from future creditors, keep the funds away from the heir’s spouse, or to prevent the heir from spending the money wastefully.

50

My D is one of those that entered a marriage with a lot of debt. She is in med school and has those loans, plus less than $30,000 in UG loans. I know her new inlaws were concerned. I was not in on those conversations, though the wedding happened and they were there, apparently happy to be there, so I think it will be OK. I do know the in laws asked them to use half of their wedding money to pay down loans.

51

**We taught our kid to count using money and have been open with him about our household accounts and finances, to the level he could understand, since he was very, very young. We helped him open a savings account when he was in kindergarten and introduced him to our broker/financial planner when he was 11 and wanted some advice about some stock my brother had gifted to him for his birthday. He has had his own separate relationship with her since then, and she handled all of his investing and distributions while he was at boarding school and helped him set up a Roth IRA when he graduated from high school. He has read through and understands all of our financial documents (will, trust, HCPOA, etc.), knows where all of these documents are stored, and knows who to call should anything happen to us. He has had his own will and beneficiary documents since he entered a service academy (required) and is quite savvy about both his and our financial affairs. We included him in our retirement planning explaining how we arrived at our investment nut, what our retirement budget looks like, and how we plan to deal with Social Security, health care coverage, and emergency funds. He also understands that we plan to die with a dollar and that we did not work hard all our lives to make him rich. Instead, we have equipped him with the best education he could consume so he can make his own way in the world and provide for his own future. He is well on his way to financial independence.

We feel that teaching our son to master money, budgeting, saving, investing, retirement planning, and building wealth was as fundamental as teaching him lessons on safety and good citizenship. I would echo the question above, but I would leave out the qualifier “adult.” The earlier children are taught to understand finances, the better equipped they are to eventually stand solidly on their own.**

52

It wasn’t my question above— just echoing a prior poster. And the question isn’t whether one should verse children in fiscal responsibility and fundamentals. It’s whether you should make them privy to YOUR financial particulars. That really depends upon you and your kids.

Not all kids turn out to be good, honest, responsible adults. And even those who do have bumps along the way. It may not be a good idea to entrust certain people, and that included your children, with certain private info. They may be careless, talkative, dishonest with the info.

53

I have spent most of my life as “the watcher” and “the listener” around kids, teens, young adults as I host them, drive them, just be there around them, and many of them so trusted by their parents are indiscrete about not just their own private business, but their parents’. Sometimes their parents private financials and sometimes about business/job situations that can be ruinous. Yes, they do not always use good judgment. They talk about parents’ finances in a way that I would not want made public. I doubt any of their parents know this. I doubt I’m the only adult who has heard these things. I also would not swear on anything important or dear to me that my kids would not let out info I want kept private.

54

During the time that the trust is in existence, before being fully distributed, some one needs to manage the assets, file taxes, etc. Some of these functions have costs associated with them (trust tax returns, or annual reports, for example). Look up the responsibilities of a professional trustee. Could this person also be your executor? Yes, but there are additional responsibilities, and expenses. Do you have to use a professional for these services? No, but you probably want someone who knows how to manage a trust or has some financial experience. Where are you considering having the money invested? Who will be legally responsible for investing/managing it?

55

I have shared some details about our finances with our 33- and 29-year-old offspring, but it’s always accompanied by a mini-lecture on how they shouldn’t expect to inherit much because their father or I might end up needing long-term care as we grow older. I make a point of bringing this up because they never saw a situation like that in our family. All of their grandparents died suddenly or after brief illnesses while still living independently. So they have absolutely no clue about what a long decline in health of an older person can mean – and frankly, neither do my husband and I.

The 29-year-old knows more about our finances than her brother does. That’s because she’s married, owns a house, and has borrowed (and paid off) huge loans for graduate school. She has realistic ideas about what’s a lot of money and what isn’t. Her single, apartment-dwelling brother who’s never had a mortgage or student loan may be less realistic. I’m concerned that if he knew our net worth, he would think “Wow, that’s a lot of money and half of it will be mine,” when actually, it isn’t that much and he may not get half of it anyway (see discussion of long-term care above).

56

@roethlisburger @twoinanddone @CT1417

The last time we updated wills, ds had just turned 18. We updated at that point because we no longer needed to have a guardian lined up in the event of our simultaneous deaths and we had not updated since ds’s birth.

We don’t have 7 figures, but we don’t have an insignificant amount either. At the time we updated, it didn’t seem prudent that ds would, at the age of 18, have such significant assets dumped in his lap should we both pass at the same time. I had one POD account that would cover a quarter’s worth of college costs, so he would have immediate access to cash. I, too, need to read back up on what we decided to do, but my memory is that all the assets went into a trust for ds’s benefit. Assets are managed solely by a trustee until ds is age 30, and assets are then co-managed by trustee AND ds until he is 35 at which point all assets are distributed to him. This was what the attorney advised at that point in time. There are no set amounts to be distributed, but there aren’t restrictions either. I can’t recall the exact verbiage, but it allows the trustee flexibility. The trustee is a bank trust department. In the past we had various individuals listed as trustees, but the continuity of an institution appealed to us at the time. The individuals we had were friends. We have NO ONE in our family who could serve as trustee. Until ds turned 18 his guardian should we pass was also a family friend (different from the trustee, of course). Ds is now 22, and we have moved to another state, and we feel it is time to update again. I seriously doubt that we will keep that trust structure, and would probably give everything to ds outright, but he haven’t met with anyone yet. So, yes, the way it is set up now there would be someone to help with all the things that @TdoesCollege mentioned.

Like @Marian - thus far, we have not dealt with any parent in the family going through long term care. Dh’s dad died suddenly and unexpectedly as well. His mother is the only living parent we have. We hope to leave ds something, but we also hope that our care is covered so we are never a burden to ds. If all we have gets eaten up by our care, that is what happens.

I will say that my view on much of this is skewed based on my own personal experience. I lost both of my parents at age 24. It does happen, you know. My parents had recently changed their wills (and my dad had reduced his life insurance) after I had graduated from college. Everything came straight to me. Prior to that change there had been a pour over trust in place. I am absolutely leaning at this point to just leaving everything outright to ds. Inherited property is not marital property regardless (I was engaged, not married when my parents died). Ds is a “young” adult. While a generalization, I think there is a big difference in the maturity level of a 22-year-old and a 35-year-old. Our intent was not to keep money from ds, but to preserve it and allow him to have time learning to manage it and mature. I am not trying to control my finances from the grave - I am trying to be responsible. A fully-launched, financially independent adult, is a different animal from an 18-year old college freshman. Both, however, are technically adults.

If we update our wills, we will certainly let ds know that the trust issues are no longer there. The plan would be to do a revocable trust to avoid probate. But, letting him know of that change is a separate issue from letting him know what we currently have.

I have appreciated all comments! Thank you!

57

Another vote for paper statements. Unless, you really want your survivors rummaging through your laptop for records!

58

Thanks @Hoggirl.

I have dealt with LTC with both parents: very short benefit payout for my father, and a longer one for my mother. I will not purchase LTC insurance for myself, but I know firsthand how much help can be needed for someone who has physical limitations, and suffered a slow decline.

@TdoesCollege–Thank you. Pathetically, I had not even thought of the asset management or tax filing obligations, and as I am still dealing with closing out my mother’s estate, I know what a task that can be. Not something I should burden my friend with for ten years. My children are 20 & 23 now, so I should evaluate through a different lens.

59

This is an interesting and for me, timely! topic. We are about to update our trust because of all the new tax laws. Plus I am working through my mom’s trust, going to (fingers crossed) settle it and disburse this year. We are kicking around having the kids (27, 29) come with us so they can ask questions and maybe share input. We have been … I’d say “cagey” about sharing info. They know we are conservative and frugal and both grew up poor, but also know about stock options and buying realestate 35 years ago and how it appreciated in the bay area. So, a general idea, but not specific numbers. And I am really struggling with what to do with part of my inheritance (that I don’t have yet). Our old farm was homesteaded by my great-great-grandfather. I worked on it when I was a child. We didn’t live near it while raising our kids, but visited often. This is property “worth” seven figures, except that there are NO buyers at that price. And some of it is more valuable in memory than in practice, so we might be able to sell the farmable part and keep the rocks. No one lives near it though. And no grandkid (it is currently my dad’s …as I said, I haven’t inherited it yet) wants to be a farmer. On the other hand, it would be so sad to see it leave the over 100 year family ownership. Guess I won’t see it from the grave though! Just something to possibly discuss further with the kids.

And a little different wrinkle, my DH and I have decided to keep our mouths shut for now. Do you “advise” your kids about getting a pre-nup, possibly based on potential inheritance? If we don’t need long term care, I don’t think we can spend down to a dollar, and especially if there is still the farm to inherit. Back in the day (45 years ago, married 41) DH and I DID actually discuss prenups, but we were both poor. I didn’t consider the backbreaking farm to be of value, so we didn’t do a pre-nup. Now, with the potential of stock options, shouldn’t the kids talk about it? Perhaps they did already, who knows. If I do speak to them about it, I think I will limit the statement to be about the same as the “safe sex” lecture… if you can’t say the word condom to a partner then you shouldn’t be in a position to need one. Your choice to use one or not, but say the word. Now it would be If you can’t say the word pre-nup to a partner then you shouldn’t be in a position to need one. Your choice to use one or not, but say the word.

Growing up in hard! Wish I was all grown up already.

There are as many choices for telling as there are families, and even kids!
OH, and someone above remarked that inheritances are separate property…CHECK YOUR state, because not every state agrees with that blanket statement. And every state has differing rules for proving you are “keeping” it separate.

60

@esobay - I was the one who said that about inherited property not being marital property. It is always advisable to check one’s individual state laws for sure, but the general rule AFAIK is that it is not marital property. Commingling, intent to share, etc. all become issues for sure when divorces arise. However, simply keeping only the heir’s name on the inherited property (at least for most types of assets) is pretty easy to do.

I woudln’t ask my kid about prenups. I don’t think I would even mention it, but as this thread has shown, everyone has to make decisions that best suit their family dynamics and individual circumstances.