How to talk about family finances during the holidays.

First, recognize the importance of financial and estate planning.

“Families who don’t have estate plans in place, or who have plans that have not been updated or shared, can face unexpected tax burdens, legal implications and other difficulties when an aging parent passes away, so it’s extremely important to talk about these topics early and often,” said Andy Hoffman, Private Client Advisor with Commerce Trust. “It is already a difficult time when a loved one passes away, and having a plan in place and communicated can ease the emotional burden on the family.”

Next, make a plan with others, considering timing, location and participants.

Consider broaching the subject of the conversation well in advance of the holidays. Here are some details to think about prior to meeting:

• Consider who should be involved in the conversation. Should you simply include your children, or also include the grandchildren? If your family has a financial planner or advisor or an estate planning attorney, consider whether to include them.
• It can be helpful to think about your family goals and values, and what you hope to achieve from the conversation.
• Create an agenda of topics you want to cover with the family, whether it be assets such as family heirlooms, real estate, a family business or investment holdings.
• Ask participants to come prepared with any questions or concerns they might have.

Discuss expectations and responsibilities and set a plan for the future.

If estate planning is new to your family, it may be best to start with the basics, which a financial planner or estate planning attorney can explain. This may include an explanation of basic estate planning documents and their purposes. These documents may include wills, advance directives, power of attorney (financial and healthcare) and trusts.

Many estate plans include family members or trusted advisors taking on certain responsibilities, such as power of attorney or trustees, and an imbalance of responsibility can lead to friction within families. It’s important for your family to understand how you want your assets distributed and whether any responsibilities come along with inheritance (like maintaining family properties or caring for younger family members).

One difficult conversation now could make for many smoother holidays in the future.

“Talking about these issues might not be easy, but it’s an essential step in making sure that your family’s relationship and assets are set up for maximum benefit for all,” said Hoffman. “By approaching the topic with care, timing the conversation appropriately, and framing it around love and responsibility you can ensure that everyone’s needs and wishes are respected. Again, at the end of the day, a well-formed and properly communicated plan can help ease your family’s burden in a time of great emotional stress. Reducing this stress can help promote family harmony for future holidays.”