Have You Discussed Your Financial Planning With Your Family?

By Mo Vidwans

On many occasions, in this column, I have emphasized the importance and significance of proper financial planning for all aspects of your life, starting with what to do after you get your first job or when you get married or have children or some major event like a wedding or even retirement. It could be a myriad of things and the list is long. But the real point is that you need to be aware of it, seek help and do something about it.

This month I wish to discuss another subject which is equally important, if not more, but rarely gets discussed or accomplished; and the consequences are dire. I am specifically thinking about discussing your financial planning thoughts not only just with your trustees, guardians and other key people but also with the rest of your family, especially those who will be affected by it.

So what is this all about? Let's assume for now that your financial and estate planning documents are in place and complete (6 out of 10 in the US don't have this) and you and your spouse feel great and happy about it. So what is the problem?

Good communication ensures your plan works as intended.

Let me start by asking some questions: does anybody else know what your thoughts are that you just put down on paper with the help of your financial planner and your attorney? Do your trustees, guardians for your children or caretakers know about what you are asking them to do in the future? Have you taken their consensus and agreement? Are they willing, able and ready? Assuming the circumstances that they are not, do you have a second string or a third sting of friends or relatives who can step in and do the job for you? My suspicion would be that the answer is a resounding no.

At a minimum, I would recommend that you gather your trustees for a meaningful meeting and explain to them what your plans are, get them to understand how it is going to work for you and what their specific responsibilities would be. Assuming that you have put down on a piece of paper all your financial details, like bank accounts, investments, retirement and pension accounts and many such details, explain to them what you wish to get done with them (like whom to call, what accounts to close etc.). This task list can be really long if you have reasonable wealth that needs to be disposed or handled. Once they understand it, have a good handle on it and are willing, then you can sit back and have a sigh of relief.

It will take you much longer than you think for you to get all these documents mentioned above prepared to your satisfaction. For that to happen you have to have these ideas firmly ensconced in your mind, mulled over a long time and put down on a piece of paper. When it is all in the open and you have spoken your mind then it is open for discussion. There could be some objections which you have to answer or explain.

Remember this is your plan, your desire and they are just executing it.

So your focus has to be to answer the questions if they don't understand your wishes, not necessarily change your wishes.

Let us just think about this: if this would not happen while you are alive and of sane mind and it will all come to light only after you are gone (and after a lot of scrambling to look for the paperwork) or let us say when you are not in a position to respond or be able to explain, then there is a lot of head scratching, double guessing and confusion just to figure out from the documents what “uncle Anand" or “aunt Anita" really wanted to happen. And I would think that you do not want to be in that precarious position. If all of this is discussed before and explained then there is very little of that confusion and all that is left is execution of your wishes at that point.

If I have to guess from my experience, a very large percentage of people do not have any intentions of doing this or definitely not contemplating and I have always wondered why. There could be many reasons and just about all of them relate to us as humans and to our behavioral follies. Here are some explanations.

I am not comfortable exposing my finances.

Let's face it, who is? It is natural and very human. But unfortunately it has to be done. Just keep thinking about the consequences if we don't as explained above. We have to overcome this emotional barrier, practice in your mind as many times as you have to, muster the gumption to talk about it in the open.

Talking about it puts my family in an uncomfortable situation; its best left unsaid: This may be true, but it is not an option. Your family eventually will thank you because it also makes their job much easier and pits you at ease because your plan will be followed.

It is emotionally challenging for me: Yes, indeed. And you are not alone; we all are in the same boat. Just keep thinking about the good that will come out of such talk and the fact that your own plan will be followed.

It recognizes an inevitable transformation that I don't want to face: Yes, it's a fact that you are depending on somebody else to do your work now where as you have done it yourself all your life.

I wanted to maintain the existing parent-child relationship: This is a strong thought in every parent's mind. Until now there has been a bit of an authoritarian relationship, certainly when your child was little or very young but now the sides have flipped and children become the caretaker. That is hard to digest. Acknowledging that fact makes it easier to accept and let go.

Mo Vidwans is an independent, board certified financial planner. For details visit www.vidwansfinancial.com, call 984-888-0355 or write to mpvidwans@yahoo.com.