Time to have a family money meeting?

As she slowly placed the objects into the trash dumpster, Ann Hoffmann's heart was breaking. "These were my parents' precious possessions," Ann said. "They had saved them for years, and nobody wanted any of the stuff."

Her parents had passed away within weeks of each other, and the job of dismantling their lives was hers. "It was a wake-up call," she recalled.

Neither Ann, 59, nor her family,¹ which includes her husband Richard, 63, son Andrew, 21, and her daughter Marie, 18, wanted the keepsakes. "It was, and is, really sad, and it got me thinking about how we can prepare our kids and what we might be leaving them," she said.

It wasn't just letting go of her parents' material goods that had her troubled. "My parents had also left us a huge financial mess. I thought they were prepared, but there was some dementia going on. Their will turned out not to be valid, and we had to go through probate in 2 different states. It wasn't a huge amount of money they had, but it all got whittled down so fast."

In the end, "it was time-consuming, stressful, and so unnecessary. I knew that I didn't want to leave this kind of thing to my kids," Ann said.

Being open about family finances

Ann and her husband decided it was time to sit down and talk about the family's finances and future inheritance issues with their kids. "They were old enough, and it was simply something we never talked about with them," she said.

The conversation, though, was not an ad hoc one. The couple carefully planned it in partnership with Christian Kimball, CFP^®, their Fidelity advisor, who acted as moderator and facilitator during the casual 2-hour luncheon meeting. "I feel my commitment in working with families is to facilitate their shared learning and collaboration, and to have more openness and transparency around the family finances," says Kimball.

The process began weeks in advance via individual interviews Kimball conducted with Ann and Richard, and importantly with their 2 children, to make sure everyone had a voice and was comfortable having the discussion.

Planning beyond retirement

Since Ann and Richard had a solid retirement plan in place, a primary aim of the conversation was to examine how Ann and Richard would distribute their wealth with the children now and in the future. "As money comes and goes, it can affect family relationships," Kimball said. "The Hoffmanns were worried about making a mistake that could negatively impact the kids and they wanted more conversation about those concerns.

Family money conversations typically run the gamut from financial planning questions, to gifting to the children, to ideas on charitable giving, and creating a family legacy. In the Hoffmann's case, the children were young adults on a more even playing field with their parents and ready to discuss their financial futures and ways the parents could create a fair distribution of their accumulated assets between the children.

"We discovered during the discussion that both children felt they didn't know how to invest," Richard said. "They've had savings accounts their whole lives, but we haven't educated them that much about investing. Now we know the importance of doing that."

And they realized that there was a special object that had meaning to their daughter. "Marie loved the antique grandfather clock that had been in Richard's family for generations," Ann said. "It's a living thing to us that needs to be wound and maintained, and the expectation one of the kids will care for it meant so much to him."

Clarifying wishes and fears for all family members

At the heart of their family conversation was getting to the core of Ann and Richard's wishes and fears for their children and their future. "The kids will be moving out of the house soon and starting to think about their lives and careers apart from us," said Ann. "We told them we wanted them to come with us for this family conversation, and for them to take it seriously. We didn't want them to just be rolling their eyes, saying what is this?"

They didn't. "We have a great family dynamic," Richard said. "We don't want that to ever change, especially when they have their own families and live in different parts of the country or have different economic circumstances. Our hope was this kind of discussion would bring both of our children closer as a team moving forward to work as stewards of our wealth."

How to spread the wealth

Another surprise for the couple: "The kids said they would both want the money they inherited from us divided by need, not just clear and equitable down the middle," said Ann. That sparked a dialogue on ways they might distribute funds through gifts while she and Richard are still alive. "I don't see any reason not to be helping out financially along the way."

"If we could do a couple of things, say, help with down payments on houses, that would be great, but we wanted to get their input on it," said Ann. "So we asked 'Would it be nice to get that boost?' Interestingly, our son said he'd rather not take the money for that because he felt it would compromise his independence."

The couple also worried that their kids might get tripped up by failed marriages. "We let them know, for example, we thought they should both consider having pre-nuptial agreements before marriage," Ann said. "We're not super wealthy, but we certainly wanted them to think about their views on it."

Building an emotional connection as a family

For the most part, the discussion did not dwell on dollars, but building an emotional connection together as it relates to the family's wealth. "For some clients, the first family money conversation can often lay the groundwork for ongoing discussions where everyone feels they have a voice to express themselves, and financial issues don't fester, or resentments arise," Kimball said.

While that motive, without question, was the spine of the Hoffmann family talk, it was the feelings that echoed days afterwards that were most important. "It was emotional in many ways, and we left the room feeling closer," said Ann. "The valuable thing for our family turned out to be the most basic part of the conversation—we were all together in the room talking about things for 2 hours that we would not usually talk about," she said. "That was the magic."