Succession Planning: Should I Tell My Kids the Numbers?

If your children stand to inherit a substantial sum, it’s likely that you’ve considered a few of these questions:

·      Do we tell them how much they’ll receive (an estimated amount)?

·      How do we tell them?

·      When do we tell them?

·      How old should they be when we transition the funds?

At the heart of these questions is this one:

Do you have the right steps in place for the succession of wealth?

In other words, have you educated your children, fiscally speaking, and provided them with the full breadth of information they’ll need to be good stewards of that resource?

The Basics

Before you talk to your kids about inheriting money, you want to be certain they understand basic financial concepts. I’m talking about things like:

·      Can they read a balance sheet?

·    Do they understand cash flow?

·      Do they grasp your intentions & expectations behind the wealth?

If you’re uncertain how much they comprehend or don’t know how to broach the topic, Millennial Guru can help you walk through that process.

Understanding the basics is key because it sets the stage for future knowledge growth. As your kids get older and assume more fiscal responsibility, not only will they know more, but they’ll be more cognizant of the types of questions they should ask regarding both personal and business finances, which will help them make better financial decisions.

I’ve mentioned in other blog posts that my siblings and I attended “Dad’s Class” every Saturday as kids, where we learned lots of life lessons, as well as the ins-and-outs of finance.  One tool he used was having us memorize the names of the 10 stocks he’d bought for us, like McDonald’s and Walgreens, but initially those names didn’t mean much.

After one particular Dad’s Class, we visited both stores and my dad talked about what it meant to be stockholders. We discussed how many people eat at McDonald’s and shop at Walgreens every day. He explained that we earned dividends every month when those companies made a profit. Having that visual, and making the connection that we made money when people bought things at those places, really helped the numbers piece click for me.

Although that’s a simplified version of how it works, my dad’s goal, which he achieved, was making financial concepts easy for a 12-year old to understand. As I grew older and financial terms became more complicated, it’s been easier for me to grasp more complex topics because my dad provided me with that basic understanding.

The Bigger Picture

Just as important as teaching your kids basic financial concepts is helping your kids embrace and internalize your family’s (and family business’, if you have one) values. As you think about passing on a significant sum of money, you want to consider whether your children are prepared to use their inheritance in ways that honor the values you champion.

My parents, for example, were intentional about teaching my siblings and me from an early age that it would be our job—our duty, really—to preserve and grow the capital we received from them, so we could give back to the world. We created a Family Mission Statement that helped all of us understand the values our family held dear. If your family hasn’t articulated the values that are most important to you, check out this post for more info on creating Family Mission Statements. Having one, and teaching your kids to use it to guide their decisions, can be a key element of passing on your values.

Invite Millennial Guru To Be Part of Your Family’s Team

When you work with Millennial Guru to customize a plan for your family’s succession of wealth, an important part of the discovery process is learning more about your human capital, your most precious resource. As you consider how to teach your kids financial principals, and how to share your succession plan with them, identifying each family member’s natural talents can be a tremendous advantage.

Millennial Guru can help you by using CliftonStrengths to identify those talents but we go beyond that initial step. We help you understand and use that information, working with you to determine how everyone best learns and processes information. Doing so allows you customize—and maximize—your efforts.

Finally, Millennial Guru helps you craft a wealth succession plan specifically for your family, based on your unique situation, your family members’ natural talents, and your family’s values. Contact Millennial Guru today to find out more about how we can help you plan for a successful transition of wealth of in your family.

Paige Cornetet