The Money Talk You Should Have With Your Kids Before You’re Gone

What if the things you want to pass along to your children aren’t what they want? Figuring out the answer to that question is a key first step in inheritance planning.

Almost all the financial decisions parents make around our kids have one thing in common: We want what’s best for them. This is the case whether we’re setting the amount of an allowance for an 8-year-old, helping a teenager to make college choices, or deciding whether to lend adult children the money for a down payment on a house.

Here’s the problem: What we assume to be the best isn’t necessarily what our kids need or want.

Financial planner Ross Levin, who writes a monthly column for the Minneapolis Star-Tribune, addresses this question in a recent article. He describes a situation almost identical to one I have encountered with clients: parents intending to leave a vacation or family home to their adult children without first finding out whether the inheritance would be a blessing or a burden.

Levin says, “Many clients come into our office with the unstated, but limiting, assumption that ‘I want my kids to have what I have.’ This usually leads to bad decisions.”

I would add that this assumption is based on a second one that goes even deeper: “I want my kids to want what I want.”

This unconscious belief can lead to expectations and actions that result in hurt feelings, resentment, and family discord. Some of these are related to major life choices — assuming children should or will take over a family business, for example, or pushing them toward careers the parents see as best for them.

Smaller decisions can be problematic, as well. In his book Intentional Wealth, counselor and coach Courtney Pullen tells the story of a successful entrepreneur who bought his son a car for his 16th birthday. Unfortunately, the car was a brand-new white Lincoln Continental. The boy’s friends promptly dubbed it his “Pimpmobile.” The gift that represented success and value to the father was an embarrassment to the son.

Source: iStock

Source: iStock

An important first step toward reducing the impact of “I want my kids to want what I want” is recognizing that we actually harbor this assumption. My suggestion? Assume that you do believe this. It’s perfectly normal. If something is important or brings satisfaction to us, it’s natural to think other people will see it the same way. The problem arises when we act on that assumption instead of finding out whether it’s valid.

Most of the time, the best way to find out whether someone wants what you want is simply to ask. Suppose the father in Courtney’s story had talked with his son about what kind of car he might want – ideally, within some clear limits about cost, safety and practicality. They could have shopped together to find a car the son genuinely appreciated. The experience could have created more closeness between father and son.

In the case of my clients and their home, I encouraged them to discuss the inheritance with their kids at the next family gathering. The discussion included information on the cost of upkeep and taxes, how much time the various families would be able to spend at the house and how the shared ownership might work.

Ultimately, the siblings all agreed that they didn’t want the house. The memories of family time spent there were precious to them, but those memories were primarily about the people, not the property. The relationships were more important than the place.

The parents’ intent with this inheritance was clearly to provide “the best” for their children and grandchildren. Their goal – which the children appreciated – was to encourage continued family closeness. The family conversation showed everyone that ownership of the house wasn’t a necessary part of that goal.

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Rick Kahler, CFP, is president of Kahler Financial Group in Rapid City, S.D.

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