When someday is today
Five conversation strategies for talking to your children about money and wealth.
You knew this day was coming.
You've been putting money into an investment account in your child's name for years.
It may have started out as a wish to save for their future-or maybe it was just a tax strategy.
But now it's become a wealth transfer strategy, and the amount of money has grown.
The problem is that you need to disclose the account to them AND talking about money and wealth with our children can feel daunting.
We often put it off until it seems too late and is loaded with emotional resistors.
To start these money and wealth conversations, we can reframe our thinking from "someday" disclosures ("We will talk about this when I decide") to "today" conversations ("Money and wealth conversations are a normal part of our ongoing developmental process").
I call this "practicing peership." Peership simply means seeking your child's voice and views so they feel your curiosity and willingness to help them make sense of their life.
And it is especially important, yet often overlooked, around money and wealth topics.
Talking about money and wealth with our children can feel daunting.
Here are five money and wealth scenarios to help you know what a peership approach might look like.
Move from control to influence Successfully navigating financial disclosures of trusts and custodial accounts requires us to reflect on our parental control.
If we try to assert control with young-adult or adult children when we don't actually have it, it can quickly turn to resentment or push them away.
Practicing peership with your children through time means moving from a control-based relationship to an influence-based relationship.
Having influence means you have a relationship where they want to hear your thinking, even when they do not have to do what you say.
A key way to cultivate this influence is to offer transparency and sense-making conversations about financial topics that impact our children.
Secrecy and avoidance around money and wealth topics are forms of control.
Offer transparency and sense-making conversations about financial topics that impact our children.
Kim wasn't surprised there was a UTMA (Uniform Transfers to Minors Act) investment account in her name, because her parents had told her they established it.
However, she was surprised to find out how much she would be receiving when it became hers in a little over a year.
Kim's parents had always been very transparent about their family wealth, but she hadn't expected to have access to so much money at this stage in her life.
As a result of her parents' transparency, the disclosure conversation easily shifted to how Kim wanted to be involved in investing the funds.
She said she wanted to finish college and revisit the money in the future when she would be thinking about starting a career and, eventually, a family.
Offering this type of developmental peership and transparency opens doors to talking about topics like money and lifestyle, prenuptial agreements, and future wealth transfer plans.
Tease out parts of the conversation When we view a complex, emotionally laden situation-especially one that has built up over time-as "one big problem" to disclose and solve, the conversation becomes hard to navigate.
This was the situation with Sam and Benal.
They established an irrevocable trust for each of their three children that would begin distributions when they turned 30.
When their oldest son, Robert, was turning 30, he did not know about "his" trust and didn't have much information about his parent's wealth.
What's more, he was engaged to be married, and his parents didn't know his fiancée, Joanna, very well.
They also wanted a prenuptial agreement and didn't want their other two children to know about their trusts or the family wealth.
You can feel the compounding complexity and emotions building around the conversation.
For Sam and Benal, teasing out the different parts into a series of conversations could help simplify the approach and lessen the emotional energy.
It sounds like this: "Robert, we have a lot we need to talk about at this stage of life.
We would love to create an agenda of topics with you and decide on the sequence of conversations, including when to involve Joanna.
And we'd love to hear about topics you'd like to talk to us about." Teasing out can help you surface individual topics for a continuing agenda of conversations versus viewing it all as "one big problem" to talk about.
Have proactive conversations There is an irony around using custodial accounts when investing and saving for our children's future.
When we set aside the money, it is a positive, proactive decision.
Yet through time, fears about turning accounts over to our children can make us put off talking to them.
When we are finally "forced" to disclose the account, we end up in a reactive conversation because we have missed the opportunity to be proactive and developmental.
Fears about turning accounts over to our children can make us put off talking to them.
Crystal was an easy-going child growing up, so Susan and John were caught off guard when she asserted herself after they casually mentioned her $150,000 UGMA (Uniform Gifts to Minors Act) investment account.
Voices were raised, John was highly resistant, and Susan tried to soothe the situation.
This type of outsized emotional reaction is like a check engine light in a car.
It indicates something needs to be explored.
When Susan and John reflected on their reactivity, they realized they were the problem.
If they had taken a more proactive approach to talking with Crystal about money and investing, it would have been a more normal conversation.
When they revisited the topic with Crystal, they discovered she wasn't interested in controlling the money.
She just didn't want her father to continue to invest it and keep her in the dark.
She asked if they could start investing together.
And she expressed a desire to meet with their advisor and start learning more about the process.
Talking proactively about planning, investing, and wealth can help you avoid the pent-up emotional energy that creates reactivity and can derail both the conversation and the relationship connection.
Make it about wishes, not fears Conversations and decisions about money and wealth are laden with wishes and fears.
Wishes are an aspirational vision of our future.
Fears-the flipside of wishes-are emotions that range from unpleasant feelings to deep-seated anxiety around the unknown.
A widower, Stephen, worried that his only child Catherine was still "finding herself" at 28.
He was fearful that she was expecting the trust left by her mother to support her New York City lifestyle.
Adding to Stephen's stress were his concerns about the spending habits of Catherine's new husband, Joshua.
As the trustee of his daughter's trust, Stephen didn't know what he would do when she turned 30 and had access to the money.
Stephen's challenge is making sure his fears didn't "ooze out" in his language and derail their conversation about the trust.
He could easily end up framing it with fear-based language like "can't" "should," and "if I were you." And, it's easy to imagine how defensive and reactive Catherine might get with that approach.
Instead, Stephen could flip the conversation to wishes.
He could ask, "What are your wishes for how to use this trust?" "What wishes might it help you fulfill?" "What is your wish for your career and lifestyle?" "What are your wishes for how Joshua is involved in these conversations?" Stephen could also express his fears in a way that invites conversation.
It might sound like, "Catherine, I love hearing your wishes about the future.
Can I express a fear I have?
As trustee, I want us to be aligned with how this money supplements your lifestyle.
I'm afraid we might have different views.
Can we talk about it?" Talking openly about wishes and fears gives you a solid foundation for conversation, instead of defaulting to a process that is driven by unspoken fears.
Talking openly about wishes and fears gives you a solid foundation for conversation.
Trust the process to create closeness "Trust the process" is a peership mindset that helps us facilitate closeness in our relationships through time.
Trust the process means we don't put out children in a box with negative attributions and judgements based our current experience of them.
Instead, we can stay curious and open in a developmental way that allows them to grow and change.
Looking back, Kaise and Janell now understand what trust the process means.
They realize that their fretting and behavior around their children's spending and money values were mostly based on their in-the-moment concerns.
Now, both of their kids are married and into established careers.
And while the parents may not be fully aligned with how their children invest and spend the wealth they received from their grandparents, they see that their kids are finding their way in life.
How we talk about money and wealth topics can shape the course of our future relationship with our children-and those conversations have the power to create more closeness or distance.
We all know what closeness feels like: communication, trust, transparency, safety, and openness.
And we know what distance feels like: secrecy, avoidance, control, put-downs, and lack of support.
Trusting the process helps us embody the attitudes and behaviors that create closeness in our relationships and families.
And it helps us have a developmental peership tone and approach that focuses on growth and change through time.
How we talk about money and wealth topics can shape the course of our future relationship with our children.