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Talking With Family About Wealth

It's one of the most difficult – but necessary – conversations you will have.

For a variety of reasons, conversations around money are considered taboo for most American families. Maybe these discussions remind us we won't always be self‐sufficient, or we're afraid we could damage family relationships when the topic turns to how and which assets are passed on. Or maybe we're afraid of being judged by the people we're closest to. Whatever the rationale, these fears and misgivings could lead to hurt feelings and interfere with how our wealth is passed on.

There are several good reasons why these discussions need to be had:

To protect your family's financial future. Arguably the most fundamental reason to have open discussions about family wealth is to preserve it. By making your wishes clear and openly engaging with your family, you can eliminate assumptions family members might have and prevent highly charged animosity down the road.

To prepare for unanticipated health emergencies. Conversations around wealth can – and should – involve more than the division of assets. Making decisions about your wealth and health now, while you can be thoughtful about it, will yield far sounder outcomes than those hastily made in a time of crisis.

To establish your legacy. What do you want to be remembered for? An estate plan is more than a list of assets and dispersal instructions – it's an expression of your values and feelings for the people and causes you cared about most. Talking about your wishes with your family is a first step to making your legacy a reality.

To lessen anxiety. Perhaps the most important reason to have these conversations is peace of mind – both for yourself and your family. There's comfort in knowing the details have all been addressed and everyone is on the same page.

What to Talk About

It's okay if you're unsure of how to broach these conversations with the family – this is where a little planning can go a long way.

Start with the basics. Provide an overview of your wealth plans – your various financial accounts, insurance policies and what different investments are intended for. This summary can ensure everyone understands what expenses you've prepared for and what you want your wealth to achieve. You can also make sure your family knows how to access your accounts in an emergency and where important documents are located.

Identify who will play what role in administering your estate. Managing an estate can involve a wide range of voices, both inside and outside the family. If you haven't already, this could be a good time to have your family meet your wealth team, such as your financial advisor, accountant, legal counsel and insurance agent.

Talk about your family's history. What do your children know about your ancestors? What obstacles have they overcome? This could be an opportunity to share stories of where your family's wealth came from, why it's so important and how you see your wealth continuing that legacy.

Plan for the future. These conversations are meant to be an open dialogue. What are your children's values and aspirations, and how do they mesh with your own? Is there a way the family wealth can be used strategically to meet their goals? If you have a family business, what role do you envision for your children?

The most important takeaway when planning a family wealth meeting is that these conversations don't have to be all‐encompassing, and they don't have to be perfect. If you can build trust and transparency around your wishes and open a dialogue around the responsibilities and opportunities your family wealth has created, this initial meeting will have been a success. If you prefer this meeting be facilitated by a financial professional already familiar with your family's dynamics, your Baird Financial Advisor is only a phone call away.

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