Putting the “us” in trust: How to navigate tough inheritance conversations with your children
Inheritance can be a sensitive subject to discuss with your children. Use these tips to open up productive conversations so you can find peace of mind about your financial legacy.
Rising cost of living and record-breaking house prices have caused 37% of Brits to claim that they are financially dependent on receiving an inheritance, according to Aviva research.
If you are intending to leave an inheritance to support your children, you’ll want to be confident that they’ll use your money in a way that aligns with your wishes and provides them with lasting financial security after you are gone.
A frank conversation can be the best way to achieve this. But navigating these conversations can be tricky.
Keep reading to learn key tips on how you can open up a productive conversation with your children about your financial legacy.
Start sooner rather than later
When navigating sensitive topics like inheritance, the earlier you start talking, the better.
This gives your children more time to come to terms with the reality of your mortality and their likely inheritance, and how it could best help them. The later you start, the less time you may have to resolve any potential disagreements.
There is no “right” age to begin the inheritance conversation. Consider your beneficiaries’:
- Maturity
- Level of financial knowledge
- Drive, and whether the promise of wealth could affect this through school or towards a career.
You can also match the conversation to their readiness level, discussing values and principles early on and providing full transparency once they have achieved financial stability themselves.
Be honest about your wishes
You will likely have your own wishes for how your inheritance is used.
As mentioned previously, you might want your wealth to provide your children with lasting security. This could solve practical issues, such as helping them onto the housing ladder or paying off a mortgage.
Rather than keeping these wishes to yourself, discuss them openly with your children. This can help them understand the intended purpose of their inheritance. It also offers you the opportunity to pass on wisdom you’ve learnt during your own financial journey (more on this later).
Try to find a middle ground
Your child will have their own goals, wishes, and dreams for the future.
Just as you have explained your own intentions, be receptive to theirs. If their ideas differ from yours:
- Ask them to explain their thoughts
- Listen without interrupting
- If you disagree, respond constructively and justify your own reasoning.
Remember, it’s your wealth to give, but theirs to use. So long as you are both respectful of each other’s opinions, you can create a healthy and judgement-free environment to discuss options and come to a peaceful resolution.
Pass on lessons you’ve learnt
As a parent, you’re likely well-versed in giving life lessons to your children.
When it comes to inheritance conversations, you have an opportunity to provide wisdom through what you’ve learnt during your own financial planning journey.
You could discuss mistakes you’ve made and the lessons you took from them, as well as good decisions that have rewarded you.
Your advice could help steer your children’s decision-making and help them understand how they might best use their inheritance.
If you intend to use a trust, explain your reasons
If your loved ones are young, or you are concerned they haven’t yet matured enough to receive their inheritance, you might consider using a legal structure such as a trust.
Certain trusts, such as a discretionary trust, are managed by a trustee (or board of trustees), who decides how wealth is distributed to your chosen beneficiaries. A trust can help you establish conditions for how your wealth is managed and distributed, with trustees responsible for following those terms.
This means that, through the trustees you appoint, you retain control over how the wealth you leave behind is used.
While a suitably structured trust can help ensure your wealth is managed according to your wishes, your children may feel disappointed that you did not trust them enough to give them their full inheritance.
This could create resentment, or lead to a family dispute.
It’s important that you explain your reasoning rather than leaving them to fill in the blanks.
Positively frame why a trust is needed, such as ensuring your children have a lasting financial safety net. This can help your children understand your good intentions and come to terms with your decision more easily.
Use your financial planner as your third-party mediator
It’s not always easy to express yourself when it comes to sensitive topics like inheritance.
If you are concerned about how your child might respond to your inheritance plans or need help justifying specific financial strategies like trusts, your financial planner can act as a mediator for your conversation.
Sitting down in a neutral setting, such as our offices, we can support you and your child as you discuss your shared wishes and help create a constructive plan moving forward.
We can also help explain the benefits of trust structures, as well as how we might support your children during their own financial planning journey using the money they inherit.
As a neutral party, we can also help steer the conversation logically, so emotion doesn’t take over.
Get in touch
Find out more about how your Kellands financial planner can help you achieve a productive inheritance resolution with your loved ones by speaking to a member of our award-winning team today.
Email us at hale@kelland.co.uk or call 0161 929 8838.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.