I’m glad I know where my parents have their investments and that I can be assured that they have enough to care for themselves.
I have a feeling that not knowing about one’s parents accounts is why money ends up in state’s unclaimed property funds. I’m glad that when my parents pass away I won’t have to be searching the house for every cancelled check or waiting for months for statements so I know where the accounts are.
All this knowing is to help them - whether they are our children or our parents - and to avoid total chaos and flailing about for ourselves case of sudden trouble. To me it’s not a question of nosiness about how much someone has. I would rather know sooner rather than later if there’s going to be a financial problem. Older people, and young naive people, are also more likely to be victims of a scam.
We do not like to discuss our finances with our kids, aside from their awareness of our real estate.
We’ve talked to our son about money from the time he was little and brought him in to our finances about the time he was in sixth grade and showed interest. By the time he entered high school, he had his own relationship with our broker who invested the money he had accumulated from birthdays, allowance, gifts, small jobs, etc. and managed it for him while he was away at boarding school. He would call her to disburse funds when necessary to his bank account while he was at school. We did not interfere with that relationship and we did not provide him with an allowance while he was in high school. He is now a freshman in college and she has opened a Roth IRA for him. He was raised to “pay himself first” and seems to have started well on that road.
Growing up, I was not privy to my parent’s finances, but my father was a banker, and my brother and I were taught well how to think about and manage money from a very young age. Savings were always a priority and debt was just wrong. My father always told us, “if you can’t pay cash, you can’t afford it.” And then he explained the concept of interest, how it worked in our favor with savings and against us with credit. I can’t say that I’ve never used credit or held a mortgage, but the lessons he taught were wise and strongly embedded. My parents divorced when I was in college, but neither will require any assistance from me or my brother, and we hope they spend every penny enjoying the rest of their wonderful lives. DH and I have managed our own funds, including long-term-care policies, to ensure we are never a burden on our son.
When our kids got to middle school, we told them if anything happened to both of us, we had plenty of life insurance and had also saved money for them to go to college; they would go and live with Uncle X and Aunt Y. We wanted them to know that they would be taken care of and they would not need to worry about finances.
When they were getting ready for college, more details were needed. They were told how much we had saved for them for college - so that informed decisions could be made. As they were now legally adults, they were briefed about our wills and trusts. They were also told that under the terms of the trusts, access to funds would be delayed until the ages of 25, 30 and 35. Uncle X would be trustee of the trusts and he was instructed to pay for all reasonable education and living expenses.
We have not shared exact income or asset numbers, but they are smart kids and probably have an idea of the general range of our net worth. They understand we are reasonably well off and that we own our home free and clear. However, they know where our investment and tax binders are and have been informed that we have included copies of all bank, investment, retirement and pension statements in the binders.
As far as the parents, my side of the family was always rather forthcoming with information to me and my sister. I have all necessary information about my mom’s accounts. Her attorney has prepared her will and trust; her power of attorney is on file and has been accepted at her bank and broker. After my MIL got sick and died very quickly, my FIL has finally shared the necessary information with his kids and he has had his will and trust prepared and funded. Thank goodness, he has accounts at over 10 banks and brokers! This could have been a disaster trying to discover all of his accounts.
My kids know very little about our finances. Likewise, H and I know very little about our respective parents’ finances, save for the fact that they’re comfortable.
I suppose I’ve never seen the need for my kids to know… in the event of our deaths, the info is easily accessible; and we’ve appointed a financial adviser in our will, to help the kids make informed decisions.
Nobody “admisters them” while we are alive. It’s our money and we are the trustors and trustees. There’s really nothing different in our day to day life. I think you are thinking of trusts when someone puts money in a trust for someone else and stipulates how it can be spent and therefore you need someone to administer it and make sure it’s spent properly. That isn’t the case.
After we are gone, if the kids are still young, we put a relative in charge of it to distribute to our kids as they need for living and schools expenses. (This is more like what you are thinking…someone needs to administer it and make sure it’s being spent properly). After a certain age, the kids get their money free and clear (and hopefully save it wisely!). Assuming it’s not anytime soon (i.e. the kids are older), then the kids will simply get their money straight from the trust and the trust is then closed.
Right,usually the trust doesn’t really mean anything until someone dies. Then the money is “put into the trust,” administered by the trustee just to make sure there is some kind of accountability in how the money is withdrawn. You can make all kinds of stipulations about how much can be withdrawn at what age. You build in protections for the beneficiaries: our kids can “fire” the trustee if they feel he isn’t managing the trust well. Eventually they take over as trustees over their own trust (at a mature age as is stipulated).
There are other kinds of trusts you can set up. For example, if your estate is so large that it would be taxed heavily upon your death, you can set up trusts before you die to reduce your estate. You put money into a trust for your heirs; it’s irrevocable, and you have to pay taxes on it even though you have in essence given it away already. That way your heirs basically inherit the asset before you die, you pay taxes to Uncle Sam in the meantime, and it reduces some of the heavy inheritance taxes that your heirs would have incurred if you had just left it to them in a will. You are parting with an asset before you die, you pay taxes as a result, but they are still less than just leaving it in the estate to be taxed even more heavily.
Trusts can be really straightforward, but they can get really complicated as well.
Our kids have no idea how much we earn or what our asset holdings are. When we die, they’ll know all. As long as we can provide for them thru college, we don’t see how it’s any of their business.
The way we see it, those who are asking for financial support are the ones who need to disclose their finances to the supporter.
Sometimes too much info is a burden. We don’t want to burden our kids at this point and will give them more info as it is appropriate.
I agree that folks asking for $$$ need to be willing to disclose and work closely with whomever they are seeking resources from. We aren’t in that position and our kids aren’t either. We know our D’s finances and the medical reasons for them. We know our S is in great shape financially and are happy for him. We don’t need more details than he opts to share.
“Our kids have no idea how much we earn or what our asset holdings are. When we die, they’ll know all. As long as we can provide for them thru college, we don’t see how it’s any of their business.”
My mom needs no support from her kids but she knows someday she might not be cspable of taking care of her finances on her own.
My inlaws have done nothing except write a will. FIL is 90 and not well (several bouts of pneumonia in just the last three months.) MIL is 86 and has the beginning of dementia (diagnosed.) If my FIL passes away before her (very likely) she is totally incapable of managing their finances even though they do not need a dime of help from their children. My H and his brothers have been trying for several years to get them to do the simplest things like power of attorney and medical proxy and they can’t even take that simple step. They also really need in home care at least a few days a week or need to sell their (big) home and move into assisted living. The brothers tell them and they love all the ideas yet do nothing to follow through. We made appt for them to tour an assisted living place and MIL called the day of and cancelled. They are both in complete denial about their situation.
I’m just glad they are not my parents and I won’t have to deal with the mess once FIL passes away.
I couldn’t even make an appt for the cable company to come to my mom’s house for a service call when she was hospitalized because I wasn’t an authorized user. She had to call them from her hospital bed to put me on the account.
Yeah, that’s a mess that’s just going to get messier! The whole idea of letting people find out “when you die” is assuming that your last months or years are completely orderly and full of mental competence. That is just not guaranteed! By the time the decline comes, the older person just cannot handle being on the phone all the time arranging things.
If you can’t trust your children or want to keep things private find someone else you can trust. There are probably financial services that do this. Either that or consciously reevaluate your situation every five years. Make it every three years as you get older. Can I handle stairs? Do I still need a car? Is it getting hard to balance my checkbook and remember bills?
The kids can do the math and ballpark figure out what our assets are (hello zillow), and ballpark what H makes (given his title and the company he works for), but they don’t know how much debt we have, how much equity we have in the house, and how big our retirement nest egg is.
As teenagers, we don’t think they need to know those things, although I want to err more on the share side than H does because I have financially irresponsible parents and I want the kids to see that we’re doing a good job in terms on not becoming financial parasites on them someday, and that we’ve been responsible with saving for their colleges. H says they already trust us and we don’t need to prove it :). He’s right.
H’s family is well off but super frugal-we don’t really know just how much they have, and we don’t want to. As long as they can take care of themselves and enjoy all the years of hard work they put in earning that money, that’s all we need to know.
My parents are financial disasters. At some point there’s going to be a telephone call that they’re indigent, and we’re not looking forward to dealing with that. It may end up being my younger brother’s problem since they haven’t spoken to us for almost a decade (after we refused to repair a financial situation they had dug themselves into after we told them not to).
“as long as they can care of themselves and enjoy all the years of hard work they put in earning that money, that’s all we need to know.”
And what happens when the time comes and they can’t handle their finances on their own? Let me tell you it is a huge PITA to have to do this after they are sick or mentally unable to understand anymore.
I’m very mad at my in laws for not doing what should have been done years ago and it’s all going to be a huge mess for their kids to have to deal with .
Our son knows to call our lawyer and our/his broker should anything happen to us, but he also has copies of our trust/will/healthcare power of attorney, etc. We have already named him as the one to make decisions for us should we become incapacitated and he is the executor of our will. We don’t want him to face any surprises if anything happens to us otherwise, yes, it could get messy.
My kids (boys ages 18 and 21) know a heck of a lot about my finances. They’ve known all along about my budgets, my future plans and goals, etc.
I know very little about my 92 year old mom’s finances. She is very guarded about it and no matter what we try, my sisters and I, she doesn’t help us help her at all including the time we were sure she was getting fleeced in a bogus investment scheme. She and my dad, when he was alive, just didn’t feel comfortable sharing any of that with us and we are not after her money at all.
I’ve never accepted the model that you get them to 18 and then set them free anyway so I’ve always been very open about what I earn and save and what I intend to do with it for better or worse. I look at it as a multigenerational thing and the goal is to be happy, build wealth and security for the next generation and the one after that (my grandkids, unborn, obviously, at this point). I plan ahead. Way ahead. When my grandkids are born I’ll be ready to fund the 529 plans and education IRA’s and so forth.
It makes me happy.
It makes me happier than peeing money away on things that don’t matter.
I value education and I’m willing to fund it. I do not have a garage full of crap, in related news.
My next step is to teach my kids are budgeting, investing, selling option contracts, etc. I feel like I can explain it better than anyone else can so it is “my job” so to speak. The US markets are down quite a bit year to date preventing me from selling some option contracts I wanted which really screwed up this year’s budget. That is life. I have to adjust the budget but everything will get paid for. Handling debt is another one of the lessons.
Balancing one’s income rate and savings rate is critical towards building wealth. I started with nothing so whatever the hell I have I earned it the hard way (to borrow a joke from Caddyshack).
I don’t consider my finances secret but I tell me kids don’t talk about it outside this house. I want them to be able to manage the family fortune, I hope that doesn’t come off as obnoxious, when I am gone. I don’t take a vacation every year and I’ve cut plenty of corners over the years. I scrimped and saved as the Beatles said in “when I’m 64” and it is paying off now. I’m not bragging. I am sure half the people hear are high net worth. Good. I respect the hell out of that but if you are in the cheap seats that is fine too I get along with all stratas. I’ve been wealthy and I’ve been penniless. I was the same person the whole time.
I keep it all on excel. I update the excel spreadsheet for each transaction. I don’t keep the receipts unless I need them. I have a summary tab on that same excel file that combines all of the assets (e.g. bank account balance, investments, retirement assets, education related funds) and deducts the debt (e.g. credit card balances paid off every month to avoid interest and a second mortgage that will be down to zero soon). The A minus the L equals the OE.
My wife’s income, which used to be minor but is now pretty good, is a whole different animal. She does what she wants and spends what she wants. Somehow I end it paying for all the things we need and she is off budget for everything. Apparently, she is far smarter than I am. To be continued.
H’s younger brother is an attorney, and he is very close to his mom, so I’m assuming she’ll turn to him when and if she needs help. Also, he has a younger sister who is also an attorney, so while we’d help in a supportive capacity if they asked us (like needing help downsizing or selling a house-which we’re good at), I’m making the educated assumption that we’re the Prince Harry of the family in terms of being necessary for money succession/distribution/usage.
^ That a lot of assuming. H has an extensive finance background, plus knows what steps my parents took, has talked to several elder attorneys also and given his parents all the information they need to proceed and his parents still haven’t done a thing.
It’s already bad given their ages and their health issues and is going to get a lot worse.
If FIL dies first and MIL has dementia, I think this will end up in court. Good luck.
I think this is one of those modeling things. Our kids understand our finances. We understood our parents’ finances while they were alive, and were their executors when they died. Our parents understood their parents’ finances… and so on…
My parents bought a house when I was 10 and I asked questions which they very matter-of-factly answered. I wondered how we could afford that house. My father reported the conversation he had had with his banker about that very question and reassured me the banker had said we could afford “more” house than we were buying. He used to take me with him when he was buying a car. Certainly I always knew my parents’ income. Our kids have always known ours. Like the poster upthread, we cautioned them this was family business.
adding: I have a drawer with the wills, POA, financial documents, etc. If anything major changes in our finances, I update the kids so they know. Since they were pretty young, I’ve given them a rough idea of what assets they would have if something happened to husband and me at the same time. They understand at a certain point there will not be life insurance (term) but pointed out: “by then we shouldn’t need it.” Right, they get the idea. Already, they don’t “need” it any longer.