A Warmer Approach to an Often-Cold Discussion

Summertime is fast approaching, and with it, conversations in households across the country are filled with excitement centered around summer plans. Whether it be travel destinations, family reunions, or everything in between, these dialogues are generally light and easy to have.

Yet beneath the surface, there can be many hard conversations lurking. Vacation planning can be expensive and involve long travel days. Family reunions may remind us of lost loved ones. The tone and focus of any conversation are critical to how we feel during the discussion, and nerves can even impact how we feel leading up to the talk itself.

For many families, the conversation around the transfer of wealth from one generation to the next has a particularly sticky narrative of being sad or depressing. Yet, if we consider switching the tone to something our families can enjoy discussing, we may find ourselves having an easier time getting these critical conversations started.

According to a study by the Milken Institute, “a third of Americans (35 percent) say they don’t plan on discussing the transfer of wealth with their families, despite the fact that nearly half of all Americans (48 percent) plan to leave an inheritance” (Pennington, 2024). Another way of saying this is that 73% of Americans who plan on leaving an inheritance are not even starting the conversation with their family. This is an alarmingly high statistic.

There are a host of reasons why families tend to avoid these conversations. Talking about money is often challenging and emotionally laden, and the same goes for talking about the eventual death of loved ones. People’s privacy considerations are also a factor, and, of course, there may be tax considerations.

How can we help those who plan to leave an inheritance begin having these discussions? One thought is to simply change the tone and focus of these talks. Instead of jumping right to breaking the veil of privacy, or placing a looming death as the conversation starter, consider these focal points:

• Do you have any specific goals, priorities, and/or family traditions that you hope will endure with a portion of this wealth transfer? Maybe it’s a family trip, or maintaining a summer home, or paying forward the next generation’s education.

• What values have shaped your financial life that you want to pass along with your wealth? Are there any powerful lessons, or is there real-life modeling you can share, that shaped your financial decision-making?

• Are there philanthropic objectives or specific charities you want to see supported? Take time to share why these charities and communities have made an impact on your life and have shaped a desire to give back.

• Offer a story or memory about the way(s) wealth has enabled you to do something you feel proud of.

• Engage your children about their perspectives on money. You can use news stories, or popular culture, or family lore as a jumping-off point.

Remember, the tone and focus of any conversation are critical for how we feel about the topic – before, during, and after the talk takes place. This is not a one-and-done conversation; rather, this represents an ongoing, iterative process. Importantly, you don’t need to discuss death or reveal intimate details of your investment portfolio. While it’s certainly a priority to cover the complex subject matter around generational wealth planning to ensure your wealth is transferred efficiently and purposefully, these conversations don’t have to be formal or especially jargony. They can happen with family members of virtually any age, and the tone can (and should) be geared towards both adults and children.

Generational wealth planning can be uncomfortable, confusing, and easy to avoid. But you can break the ice using the approaches above. Plan a conversation that makes you excited to have instead of one you have been nervously avoiding. Your Apella advisors are here to help you with these discussions. We have helpful resources available for you and your families that are centered around the importance of discussing wealth transfer with your heirs.

References

Pennington, P. (2024, July 17). We Aren't Talking Enough About One Aspect of the Great Wealth Transfer. Retrieved from Milken Institute: https://milkeninstitute.org/content-hub/power-ideas-essays/we-arent-talking-enough-about-one-aspect-great-wealth-transfer

Apella Capital, LLC (“Apella”), DBA Apella Wealth, is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Apella Wealth provides this communication as a matter of general information. Any data or statistics quoted are from sources believed to be reliable but cannot be guaranteed or warranted.