Your adult children are asking about your estate plans. Why you shouldn’t be offended, and embrace the talk

This is what I hear …

“We’re worried our parents have not prepared properly for retirement. They won’t tell us anything about their finances. What if we’re on the hook to pay for things? We have our own families to care for.”

“My mom wants to give me her cottage. Are there tax consequences?”

“A will? I have no clue if they’ve got one, or if it’s even valid.”

“They bought their house 40 years ago for $165,000. It’s worth $3 million today. I’ll never be able to afford to own. Why aren’t they sharing their wealth?”

“My Dad has plenty of financial advice. Is he getting any professional advice for himself?”

“They want to help me. What’s the best way for them to move money to me?”

If you’re a boomer, it’s important to read this so you won’t get upset when your children ask you about your finances. Their intentions are almost always to understand how ready for retirement you are, what your wishes are upon your death, and, nowadays, to see if there’s any flexibility to help them with buying a home or supporting grandchildren with post-secondary costs. They don’t view the latter as rude, btw; with incomes that are not keeping up with inflation, asking for financial help is commonplace.

Try these ideas to ensure your children have the answers they actually need (this doesn’t mean you have to share every detail).

Give your kids a heads-up about how prepared you are for retirement

Assume they know nothing. For some adult kids, they’re OK being in the dark. Others spend sleepless nights worrying they’re going to be left holding the bag on your eventual long-term-care costs.

At a minimum, give them assurance that you have a plan, and that it’s been reviewed with your financial planner, adviser or qualified money coach. If you have not hired one of these people to prepare a plan for you, or to review the plan you’ve made for yourself, do so. That way you’re not in the dark, too.

If your retirement plan shows there isn’t enough money to support your needs, give your kids a heads-up so that they can potentially make changes to their own financial plans now. 

It is up to you to decide how much detail you want to share with your family about your retirement numbers. But, as a tip just for you, a solid plan will tell you:

• How much money you can drawdown from your investments until you die (or, until it runs out);

• How much pension, OAS and CPP you’ll receive;

• When you’ll be ready to retire if you haven’t done so already;

• How much money you’ll need every month in retirement;

• If you’ll have excess funds or not enough.

Host a meeting with your kids about your will

You need a will and if you don’t have one yet, or if it’s out of date, get one set up as soon as you’re done reading this article. You don’t need to go through a lawyer anymore if your situation is straightforward (meaning you don’t own a business, you don’t have kids from a previous marriage, you don’t own complex investments). These days, you can make a digital will with companies like Willful, LegalWills and Epilogue Wills, and the cost starts around $100.

Here’s what you’ll want to cover with your kids:

Who’s involved and how: Share who you’ve chosen as executor(s) of the estate, as your power of attorney(s), and guardians of your children (if you still have minors). Walk them through what you want done with the assets/liabilities in your estate. Explain why you’ve made these decisions.

Where things are located: Your executor(s) need to know where your will is located, where the accounts are located, where your insurance policies are filed, if there are medical action plans for your or any minor children. I advise families to put these details in a shared spreadsheet. If a financial adviser is involved, add their name and contact information.

Deal with problems now: Watch the opening scene from “The Gentleman” and you’ll see just how badly things can go when family members are confused or surprised by your decisions. Your family doesn’t have to like your choices. But by clarifying your wishes, this will help to prevent feuding down the road.

Consider their financial requests carefully

Early inheritance. Buying/selling properties. Business ownership. Gifting cottages. Topping up RESPs. Life insurance policies. Charitable donations. 

Giving while living can make a massive difference for younger generations. If you have the flexibility to help, explore their request. Before you move any assets or money, run it by your financial planner and accountant. You’ll want to understand the tax implications (lots is changing regarding capital gains taxes). Get clear with your kids about any strings that might be attached, that you can all agree to.

Chances are you can’t overcommunicate with your kids about your money situation. So touch base as a family every few years to ensure everyone has the information they need, in order to navigate their respective next steps.

This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star