Conversat ions Conversat ions - Merriman · We spent several days scouring his home for a copy of the that he had told will me hehad written. What we found instead were copious notes

The transparentLegacyConversations you must have with your loved ones before it’s too late.

Cheryl Curran, CFP®

copyright © 2013 by Cheryl Curran


3 The Transparent Legacy

CONTENTS

A NOTE TO THE READER ......................................................................................................... 5

INTRODUCTION .............................................................................................................................. 6

SECTION ONE: Your Nuclear Family ............................................................................ 9

CHAPTER 1: Conversations with your spouse or partner ....................................................................... 10

CHAPTER 2: Conversations with your young children ............................................................................ 18

SECTION TWO: Your Adult Children .......................................................................... 23

CHAPTER 3: Conversations with your adult children ............................................................................. 24

SECTION THREE: Your Parents ........................................................................................ 31

CHAPTER 4: Conversations with your parents ....................................................................................... 32

SECTION FOUR: Other Conversations ...................................................................... 35

CHAPTER 5: Your health care and end-of-life decisions ......................................................................... 36

CHAPTER 6: Leaving a business or real estate to your children ............................................................. 38

CHAPTER 7: Conversations between grandparents and grandchildren ................................................. 40


A NOTE TO THE READER I have done my best to make this book practical for real people in the real world. However, this book is a first draft, and as such, it is imperfect. You can help make the next edition better.

When you have applied the suggestions you find here to your own situation, I hope you will let me know what happened.

• Did you find it was simply too hard to start these conversations? Please let me know that and share your thoughts.

• Did you try one of these conversations and later think you had failed? If so, please tell me about it in as much detail as you are willing to share.

• Did you try and feel that you succeeded? If so, please let me know as much about it as you can.

• Have I left out some important family conversation that should be in the book? Please tell me.

• If you tried something that turned out wrong, please let me know what happened.

• If you found something that worked really well, I would like to hear about that as well.

I am asking my colleagues at Merriman to use this book and give me the benefit of their experience. Every piece of feedback I receive will help me make future editions of this book more useful to more people. That, in turn, will help make the world a little bit better place for people you and I will never meet. In my book, that is worth doing.

I look forward to hearing from you at: [email protected].

mailto:[email protected]

INTRODUCTION When my father died suddenly and unexpectedly in 2009, I got a rude introduction to the topic of this book: conversations that should happen within families, but often don’t.

From years of working with clients, I knew the general terrain: Financial troubles and family troubles can start when people avoid talking about uncomfortable things.

I experienced this for myself one morning when I got a phone call from a close friend of my father telling me my father was in the emergency room 1,300 miles away in San Diego. I immediately called my brother, Brent.

By the time we were able to talk to somebody at the hospital, we learned our dad had just passed away, the result of an aortic embolism. This was the man who two months earlier told me his doctor had given him a clean bill of health. He had just turned 66.

Dad lived alone after his wife passed away the previous year. When we got to San Diego, his former brother-in-law and sister-in-law let us into his home with a key he had given them.

We spent several days scouring his home for a copy of the will that he had told me he had written. What we found instead were copious notes on a yellow legal pad describing the trust he intended to establish with details of what he wanted to happen with his property. Attached was the business card of an attorney he intended to use. When we called, she said he never contacted her.

As Brent and I dealt with our own grief, we looked through drawers and filing cabinets for any mention of his wishes regarding burial and last rites. We felt under pressure to make critical decisions that had been rightfully his to make. Burial? Cremation? Disposal of ashes? Memorial service? Funeral? We found no clue.

One puzzle that took a lot of our time was a pair of mysterious keys. We searched every piece of paper in every filing cabinet for some clue to what those keys would open. We never figured it out, and this mystery remains unsolved.

Our father was an engineer, and liked to have everything done perfectly, but as he waited for that elusive perfection, the clock suddenly ran out for him.

His notes on the legal pad told us what he was thinking; but without a will, the laws of California stepped in to determine what happened to his property. Unfortunately, it took about 18 months, and cost thousands of dollars, for his estate to go through the court system. Because his wishes did not prevail, a lot of his money went in a direction he had not planned.

A series of frank family conversations might have prevented Brent and me from having to deal with some of the hassle and expense. We might not have persuaded him to write a will, even an imperfect one in the interest of time. But at least we could have learned his wishes about his remains, a service, etc.

All of this made our grief process much more difficult than it had to be. I am sure Dad did not intend for that to happen.



In my work as a financial advisor, I found myself more acutely aware of things my clients were going through. I saw many people were unintentionally creating firestorms of conflict, confusion, and hurt feelings. Important conversations were missing in family after family, discussions that might make things easier for parents, grandparents, young children, grown children, spouses and partners.

Gradually I began thinking about writing a book to help people talk openly with their loved ones about difficult topics. This book is the result.

We need to converse with our families about lots more than end-of-life things relating to health and property.

• Spouses and partners should talk about their spending, their savings, and their retirement dreams.

• Children and grandparents should talk with each other about family history.

• Adult children should talk to their parents about their wishes.

• Parents can impart important financial lessons to their young children.

• Aging (and pre-aging) parents can talk to their adult children about what happens with family property and heirlooms, as well as financial assets.

Suggestions are found in this book for those and other conversations. What you say, and how you say it, is up to you. I will not tell you what choices I think you should make, except for two. First, do have the necessary conversations with your family and anyone else who may be affected. Second, if you have not made a will, do it now, and do it with the help of an attorney in the state where you live.

In every topic covered in these pages, a particularly important component is values. When is something more valuable than something else, and why? For example, is it more important to live longer or live more comfortably? Is it more important to spare yourself the discomfort of talking about your wishes for a funeral, or more vital to spare your adult children the job of

having to agree among themselves about what you would have wanted?

One of my own strong values shaped this book, and I want to state it explicitly. You may agree or disagree, but I believe that most of the time, relationships matter more than money and more than things. As I point out in several chapters, the relationships you leave behind are an extremely prominent part of your legacy. This is the most overlooked part of estate planning.

One of the greatest gifts you can give your loved ones is the opportunity to discuss the things in this book. It is not always easy, but I hope you will make the effort to do the best you can.

Relationships matter more than money and more than things


SECTION ONE: YOUR NUCLEAR FAMILY

CHAPTER 1: Conversations with your spouse or partner For many people, the most significant conversations are those with a spouse or partner. Whether you are legally married or not, the most important person in your life may be a partner with whom you share financial resources and responsibilities. This person deserves your candor and your trust.

I believe the suggestions you will find here will help you establish and keep that mutual trust.

The good news is that the important conversations in this chapter probably are not as hard as you imagine. There are four major topics I think you should cover with your spouse or partner:

• Current finances

• Retirement planning

• Investments

• Wills and final wishes

Because every one of these topics has rich, emotional components, you will do better if you do not try to tackle them all at once. Each one requires at least a little preparation on the part

of one or both of you. If you can cover one per month, you will get the job done nicely. And you will be doing much better than many other couples.

I have one other recommendation: Have each of these conversations in two steps. It’s easy to start gathering financial information and immediately start making decisions, or (if things are worse than expected) looking for who is to blame. Don’t fall into that trap. Instead, get yourself and your partner into fact-finding mode. For each topic area, limit your first meeting to getting the facts on paper, out in the open. Leave decisions and action plans for later, after both of you have had sufficient time to digest the facts.

CURRENT FINANCES This conversation focuses on the basics most of us live with daily, weekly and monthly.

Some couples avoid talking about their day-to-day expenses because they have been taught that the way to make and keep a budget is to account for every single dime. However, there are remarkably few people who can actually make and keep rigid budgets. There are even fewer people who enjoy doing so.

One of my friends had a father who could be described as an accounting nerd. According to my friend’s mother, the father once refused to take her to a movie they had planned to see, because he was balancing their financial records and could not reconcile their food purchase records to the penny. Maybe some accountants would applaud this attitude, but it certainly did not enhance the marital relationship, which ended in divorce.

I cannot see any reason you should beat yourself up over every dime. Most of us do not want to have to account for every minute of our lives. The same holds true for money.



Unless you and your partner are accountants or your finances are a mess, I suggest you concentrate on the big items and give yourselves some latitude for the smaller things. If you are going to make and use a budget, focus on broad categories of spending like housing, cars, utilities, and entertainment. Do not get overly specific except where it is needed.

In an ideal world, you and your partner would have no problem periodically discussing your overall budget, including small items as well as large ones. In the real world, you will probably do best to take this in small steps. Because we’re seeking a big-picture understanding of where your money is going rather than all the details, this may be less complex than you think. Let’s look at this as a series of questions to which you want answers.

Where is the money coming from? For most couples, this is simple. Look through your bank records for the past few months and you will find most of what you need. This may include wages, business income, pensions, investment income, IRA distributions, Social Security and rental income. Make a list of these items with either exact or approximate monthly amounts and arrive at a total.

Where does the money go? Remember to concentrate on the major items here; the best way to do that is to think of categories. Housing, food, utilities, entertainment, gifts, travel, childcare, medical, and savings are all examples. If one of these categories is a lot larger than you expected, you may want to break that one down more specifically and dig into the details.

Always be looking for perspective. If you spend $9 on lunch five days a week, that could seem like a trivial expense, but it adds up to $45 a week or nearly $200 a month. Lump this with other “meals out” and you may find you have a very significant number that is worth writing down. Likewise, a $40 trip to the supermarket may not seem like much. But if you’re doing this several times a week, you are talking about serious money.

I know a couple who like to eat well. They take the attitude that anything they buy at a supermarket is likely to be cheaper than anything they could get at a restaurant. She does the shopping and cooking and likes to make impulse purchases at a favorite supermarket four or five times a week. This habit makes it extremely easy to spend $1,500 or more a month at the supermarket without realizing it, and this routine is a substantial expense item.

Traditionally, the big expenses (aside from taxes) for most people are supposed to be food, shelter (mortgage, property taxes, insurance, and utilities) and clothing. You may find that other categories such as transportation (gas and car payments) and communications (landline phone service, cell phone plans and broadband Internet) are also significant.

Some couples run into trouble because one person has something he or she is trying to keep secret from the other. One of my colleagues tells the story of a friend who asked him if she could get a credit union loan without her husband finding out. She had a good job, and my fellow advisor saw no reason why she would not qualify for a loan. She seemed relieved and told him the following story.

This woman, who was always well dressed, had acquired a taste for fine clothes. Two or three times a week she would use her lunch hour to visit Nordstrom in downtown Seattle, where she had befriended a friendly sales clerk. The clerk never had any trouble keeping this woman outfitted impeccably. The problem: The woman acquired not only a closet full of clothing but also a credit balance of more than $30,000. Because she could always make the minimum payments, the store was happy to keep extending more credit.

By the time she talked to my colleague, she was already having trouble making the payments. She felt enough pain that she became determined to break her clothing habit. She took out a personal loan at her credit union and paid off the Nordstrom account. Her plan apparently worked, because the next time my colleague saw her, she was still nicely dressed,

but wearing sharp casual clothing that looked considerably less expensive.

If you have a financial secret or you are determined to keep your partner from knowing some significant financial information, you should consider spilling the beans to your partner. I know this is not an easy decision, but your hidden spending is likely to come out in the open eventually.

A known problem is much easier to deal with than one that blindsides you. I think it’s better for your partner to find out about it from you than from somewhere else. One good way to make sure that all the cards are on the table is to order credit reports for both of you.

Here are a few more tips that might make this conversation easier.

Accountants like to separate fixed expenses that are not easily changed (rent or the mortgage, income taxes, car payments) from variable expenses (entertainment, clothing, gifts, travel, restaurant meals) over which we have at least some control. It’s up to you whether or not to categorize your spending that way. I know some people find it helpful.

Do not forget to look at your credit card bills. It is remarkably easy to spend money online, paying for everything with plastic. A category item of $200 a month at “Amazon.com” may be accurate, but it does not tell you much about where that money is going. Books? Music? Clothing? Electronics? Movie downloads? In this case, you may want to drill down into more detail to find what you are actually buying from the online superstore.

How do you know when you have enough detail? There is no magic formula. My guess is that it won’t take too much work to account for 75 to 80 percent of your spending in major categories, and that may be sufficient to give you the big picture.

After you have concluded this discussion, and lay out the facts in writing in a way that you can understand, I recommend giving you and your spouse a few days before you try to decide what, if anything, you want to change as a result of what you have learned. If you come back to this topic a week later, you will have had time for the facts to sink in. You will undoubtedly have some ideas about what you can do.

So, set aside a chunk of time on the following weekend, and get out your worksheets. Bring a calculator, and start playing with “what-if” scenarios to improve your cash flow. If no changes are necessary and you are satisfied with things the way they already are, then by all means reward yourselves by doing something fun together. If changes are needed, you will have the facts at your command.

In an emergency, is there somebody who can take over our finances? This may seem like an odd question, but it’s one you should think about before you are in the middle of an emergency. If something happens that keeps you from attending to bills and payments for more than a week or two, you will want somebody who can step in and see that your obligations are taken care of. A relative or a friend you trust thoroughly may be willing to do this for you; and, in return, you may want to offer to do the same for him or her. When you determine who this person might be, don’t just assume you will get your way. Make sure you find out if he or she is willing.

A known problem is much easier to deal with than one that blindsides you.



When you find somebody, write down enough pertinent information so your designated person can pay the bills and taxes from the right accounts and contact the most important people. This is a backup plan that (you hope) you will never have to activate. Therefore, it does not have to be particularly detailed.

You will get a pretty clear idea how much information somebody might need if you keep a log of the necessary financial things you do every week and every month.

RETIREMENT The word “retirement” has many variations. Some people are retired, some are semi-retired, and some don’t ever plan to retire. In a couple, one person can be retired or semi-retired while the other is still employed.

For the following description, I will assume you are not yet retired. Whatever situation you find yourself in, you will be able to adapt the topic to your own case.

What is the plan? This is a very general question, and it lets you define things in whatever way is most important. You and your spouse probably have some assumptions and fantasies of what it will be like to be retired. This is your chance to find out if you are thinking along the same lines.

I can’t tell you exactly how this discussion should go, because you should focus on whatever is most important to you. But, you can start with questions like these:

• When do we want to retire?

• Will we do this cold turkey or continue to work on a part-time basis?

• Where will we live?

• What will we do with our time?

• What dreams do we have that we want to accomplish when we have more time?

• What can we be doing now to help make those dreams come true?

The all-important second half of this conversation is the amount of money that your retirement plans will cost. There are lots of general formulas for estimating retirement expenses. Some people think you should plan to live on 60 or 70 percent of your pre-retirement income. Their thinking is that after you retire you will not need to save for retirement any more, and your clothing and commuting costs will diminish.

In my opinion, if you want a quick answer to this question, I think you should plan to have as much income after you retire as you had before retirement. Once you retire, you will probably have more time to focus on what you want to do – travel is a popular pastime for many retirees – instead of what you feel you must do. If you are in good health, you may find yourself wanting to spend money in ways you did not before. In addition, your health-care costs will almost certainly be higher as you get older.

Go back to the things you wrote on your retirement wish list. See if you can put price tags on them. The closer you are to retirement, the more detail the list requires. An excellent place to start is to revisit the work you did tracking your current

income and spending. See if you can modify the items on that list to fit your retirement assumptions or aspirations. At this point, calculate an annual retirement income you think you will need.

This is an opportune time to consider getting the help of a financial planner. Pick a planner who does not sell products and works on a fee-only basis. You might also want to use the same person for the following topic.

Do we have the money? You’ve figured out how you want your life to be when you are retired. You have a fairly clear idea what that will cost. Will you be able to afford it?

This is an extremely pertinent question. I can’t give you the answer, but I can point you in the right direction.

Make a new section in your notebook, if you are using one. Make a list of your assets including 401(k) and similar retirement accounts, IRAs, savings, taxable investment accounts, the cash value of life insurance you own, and any money that you are owed (and expect to collect). You will get a total that you can refer to as your liquid assets.

In a book, those instructions might seem easy as pie. In real life, they may be tougher, especially if your investment records are disorganized. Ideally, you have neat paper files on your investments, and you also have a spreadsheet on your computer that you have kept up to date. If so, you are in great shape.

However, it will not surprise you to learn some people have a tendency to accumulate piles of unopened statements. At least they know where to start. If your records are truly a mess and you are not sure what you have, there is a relatively painless way to get a “fresh start.” Accountants might not like this, but it will work. Simply wait until the first month of the next calendar quarter, and watch for your quarterly investment statements in the mail. If you have signed up for email notifications, follow those emails and download your statements or logon to get your current balances. That will give you a total you can use in the next step of this exercise. Remember, you are still in a fact-finding stage, so do not jump into making decisions quite yet.

Next, tally up the retirement income you can count on such as Social Security, pensions, rental income, etc. This will give you a base retirement income. Here is a quick-and-dirty way to apply the numbers you now have:

If the base income you can count on is $40,000 and your target is $90,000, the difference is $50,000. That is what you will need to withdraw from your portfolio.

Once you know this magic number, you and your partner are ready for the final part of the retirement conversation.

Are we on schedule? If you go through all these steps, you know how much money you will need from your portfolio every year to supplement your Social Security and other fixed sources. Will your present portfolio be enough?

It is remarkably easy to find formulas online telling you what percentage of your portfolio you should plan on using each year. This topic has many variables and is best discussed in-depth with your financial advisor, who takes into consideration your specific situation. I have been working with clients here at Merriman for nearly 19 years, and I have yet to see two families with exactly the same short-term and long-term retirement goals and needs.



The factors you need to consider are your risk tolerance, the income you need from your portfolio, and your other long-term goals for your money such as charities, family, etc.

Most people are in a position to withdraw between three and five percent of their portfolios in the first year of retirement, then increase the annual withdrawals as the portfolio grows. Here is an example of how that might work. Suppose that in addition to your fixed income from pensions, Social Security and the like, you will need $40,000 a year to meet your needs. If your portfolio is worth at least $1 million when you retire, you should be able to do this by taking out four percent. That rate will not put you in grave danger of running out of money any time soon.

If you are already there, and you are still working and adding to your savings, you are probably in good shape. (I say “probably” because in finance, nothing is guaranteed.)

Hence the question: Are we on schedule? To get a clear answer, you will need to know how much you are adding to savings regularly and the return you can reasonably expect to achieve. Of course, you will also want to know the amount of time until you stop putting money into your portfolio and ask it to start paying you for a change.

Again, I suggest you stop after the fact-finding is completed, and let the facts sink in for a week or so. Then revisit this topic and determine what changes, if any, you need to make. If you are facing a shortfall, you can close all or part of this gap several ways. You can plan to retire later. You can plan to spend less money in retirement. You can plan to work part time in retirement. You can save more money before you retire. Many people find that a combination of these actions is the best approach.

With all the moving parts in this topic, it’s easy to become overwhelmed. Your advisor or financial planner can be a tremendous help as you sort through your options.

INVESTMENTS Entire libraries have been written about investing, and I have spent my career helping people with this part of their lives. In this book, I cannot adequately cover even the basics that I hope you know and understand.

Fortunately, neither you nor your partner needs to be an expert in order to have a useful conversation. I am interested in getting the two of you sharing information openly and honestly. If you do that well, other things that need attention will probably become obvious just in the normal course of things.

What are we invested in? You may have already done most of the basic work on this earlier under “Where’s the money?”. If not, go back and

round up that information. If this is a challenge, do not hesitate to ask your spouse to help find things. This can be a part of the education process for both of you.

The first level of this knowledge is straightforward. Write down the accounts and amounts, and then add up your balances. The next level can be extremely useful: Find out what kind of assets you actually have. Know how much you have in stocks, how much in bonds and how much in cash. Know what kinds of stocks you own and what kinds of bonds. These distinctions are beyond the scope of this book, but they can make a very big difference in your long-term financial wellbeing. If you find you are over your head, this is another place to seek help from an advisor.

You don’t have to be experts to have an open and honest conversation

There is a third level to this conversation, a discussion about whether or not the two of you own the right kinds of investments and whether, perhaps, you should make some changes. Ideally, at least one partner can explain why you are invested the way you are and discusses the pros and cons of alternative solutions. Your advisor can help with this process.

Who do we contact? Your records should be clear enough that either of you could easily reach someone at the banks, brokerage and mutual fund companies that hold your assets. You probably will not need to actually make that contact. Here is a quick test of whether your record-keeping is adequate: Do you and your spouse both know enough about your filing system that you could find a phone number or login information for each of your investments without a major trauma? If so, you are in good shape. If not, this should not be difficult to fix once you realize the need for it.

How much risk is suitable or tolerable for each of us? Another way to ask this question is: How much of your investments are you willing to lose while trying to achieve the return you need? Without knowing you well, I cannot tell you the right answer. I do know that everybody’s risk tolerance is a little bit different, and I’d be willing to bet that some risk that you regard as comfortable is either too large or too small for your partner or spouse.

If two people in a couple are not on the same page with each other, I have seen how this discrepancy can erode their peace of mind and possibly their relationship, as well.

Sometimes the issue may involve psychology more than finance: Who is in control?

It is common among couples that one person manages the financial accounts, including investments. If that is you, your partner may feel a lack of control, which can lead to anxiety. If that’s the case, consider letting your partner control the level of risk in at least one of the investment accounts while you continue to manage another one at your own comfort level. If you can agree to it, create a third account that takes a moderate approach.

This approach worked well for two of my long-term clients, who I will call Jim and Betty. They had good jobs, were exceptional savers and managed to retire in their mid-50s with plenty of money. They could have invested conservatively and lived on withdrawals of 3.5 percent a year from their savings – an enviable position indeed.

Early in my relationship with them, I noticed that when they were in my office, Jim did most of the talking and was much more involved in our discussions than his wife. As we discussed the various risk profiles at length, it became clear that Jim was determined to invest 100 percent of their money in stock funds. That is what he was used to, and he told me he didn’t want to “miss out on any market runs.” He had been through downturns and had always recovered. I asked Betty what she thought, and she said she agreed.

Even so, I had my doubts that this was the best level of risk for them. I pressed for including some fixed-income funds, and we settled on an 80 percent equity portfolio, which was still more aggressive than I thought they needed to be.

A few years later, Jim and Betty were in my office describing the very nice lifestyle they enjoyed. I noticed that Betty became very quiet when the topic of investments came up. Her arms were crossed, and she was nervously clicking her ball-point pen. When I finally asked her if anything was wrong, she started to say “nothing,” then stopped, and tears came to her eyes.

After a few moments she opened up and told her husband and me that, for the past two years, she had been uncomfortable with all the stock funds in their portfolio. She tried to ignore the risks she knew they were taking, but it was bothering her a lot.



Jim was quite surprised to learn this, as she had been doing her best to be the dutiful soldier. We talked it out and finally arrived at a solution that they both believed they could live with. We would invest their retirement accounts, which made up the bulk of their portfolios, moderately with 60 percent in stock funds and 40 percent in bond funds.

Each of them had a smaller Roth IRA. Jim agreed to let Betty choose whatever allocation she wanted for hers. Betty agreed to let him do the same. I was not surprised at their choices. He chose an equity allocation of 100 percent, while she chose to

have only 20 percent of her account in equities.

This has worked for them, and I think their relationship is stronger because they learned that each was willing to listen to the other and that they could work together to achieve a common balance.

I believe this can be a good approach for many couples. Even if you think both of you are on the same page, start by talking about it. Get your feelings out in the open, and don’t try to change your partner’s mind. If a resolution does not fall into place easily, don’t worry. There is no cookie-cutter solution that will magically solve this problem for everybody.

After you get the issue on the table, you will most likely be able to figure out an approach that will work for you. If you can do that, it will be good for your money and good for your relationship, too.

CHAPTER 2: Conversations with your young children If you have children who are college age or younger, you can teach them valuable, money-related lessons that ideally will put them on the right path for life. By the time they are four, they’re able to think about the tradeoffs with which we all deal.

You could try to make them learn rules about money. But instead, I recommend you try to make sure they have habits and attitudes that will help them learn from their own experience.

One of the most powerful ways we learn is by trying things out, making mistakes and learning from those mistakes. This is how we learn to talk, feed ourselves, walk, and get dressed. It’s not your job as a parent to stop your children from making mistakes. But it is your job to try to limit the scope of the damage they can do as they are learning.

You can let them fall on a soft carpet, but you don’t want them to fall down a flight of stairs. Likewise, when it comes to money, you may let them blow $5, but not $100. Then your job is to help them recognize the consequences, good and bad, of the choices they make.

If you can accomplish this, you have a right to feel pleased.

GRADE SCHOOL By the time your kids are in kindergarten and grade school, they are more than ready to learn the all-important difference between what they want and what they need. Although this distinction is relevant throughout our lives, unfortunately, many adults continue to have trouble with it.

By the time my nephew was four, he was starting to catch on. My brother and his wife took the time to point out this difference when they could, and occasionally I got involved too.

We all have indisputable needs such as food and water. Beyond the basics, there is a continuum from needs to preferences to wants. You need food. You may prefer food that is warm and cooked. You may want pizza.

Time and again, psychologists have learned that we tend to be happier once we realize that we don’t have to have everything we think we want.

You can let your children know that this tug-of-war never really ends. When you’re planning a family vacation, you can point out that you might all want to go on a cruise, but you don’t need to.

There are lots of interesting ways you can help your kids recognize how much our world is focused on encouraging everybody to want more things and more experiences, and then to spend money getting them. Your kids will see this on TV, billboards and advertising everywhere they go.

Want to make this lesson really stick? Turn it into a game. Whenever you are watching TV or driving somewhere, get your kids to point out all the ways that we’re being told that we should want this or that. Then get them to talk about which of these things are “needs” and which are “wants.”

Do your kids know the difference between want and need?



In fact, you can initiate a little game that will keep this topic in mind. Often you hear somebody talking about needing something, when you are pretty sure it’s not a need but a want. Once in a while you can smile and say something like, “‘Need’ is an interesting word in that sentence.”

Your young person will likely catch on quickly, and this can become a fun pastime. It will seem like a game and, at the same time, it will be reinforcing a powerful lesson.

Another basic concept that’s central to all financial success is deferring gratification. Whenever you save money, you are giving up the opportunity to use that money right now, so you can have something later that you presumably want even more.

Kids find it easy to save a little money if they can see it and touch it. Ideally, a youngster can be involved and find a source of pride in saving. My brother took my nephew to a Home Depot workshop at which they assembled a wooden box with three slots for money. One was labeled “spend,” one “save” and the third “share.”

Now when my nephew gets a bit of money, he can play the game of putting coins or bills in each slot and then figure out what to do with the money later. This box has helped my nephew learn three concepts: delaying gratification, saving money and the notion that generosity (sharing) can be as worthwhile as spending and saving.

MIDDLE SCHOOL AND HIGH SCHOOL When your kids reach middle school and high school, they can learn about banking. I recommend starting with a credit union, which is by definition a non-profit institution, instead of a commercial bank. Most likely your son or daughter already has a Social Security number, and it’s easy to open a basic checking or savings account. A generation ago, banks did business in person, in the mail, over the phone and sent out paper statements. These days, banking is more likely to be done online and at automatic teller machines (ATMs).

All this convenience is a great benefit for people who understand the system. Your youngster should understand that an ATM is not a printing press that creates money. A debit card linked to a savings account will teach that lesson fast enough. Make sure the account is not linked to an automatic loan arrangement for overdraft protection.

In the late high school years, financial institutions will want your son or daughter to sign up for a credit card. If your own signature is required to open an account, this gives you an excellent chance to get involved by putting some restrictions on the card. (If you are at all responsible for the balances, make sure you receive your own copies of the monthly statements.)

Start by insisting on a relatively low credit limit, and find out from the issuing bank whether or not you as the parent will be able to close the account later, if necessary.

There’s no question that it is safer to spend money by using plastic, either debit or credit, than by carrying around wads of cash. But, when you spend with plastic, the piper must be paid, and this is a lesson your children will need to master. The easy way to learn this is to charge small amounts and pay the balance in full when the bill arrives. The hard way to learn this lesson is to pay only part of the bill and watch the interest charges pile up.

When your teenager gets a monthly credit card statement, you can point out the calculations that show how much and how long it would take to retire a balance by making only the minimum payments. Make sure your teen understands how easily a $100 sweater becomes a $180 sweater because of interest and possible additional charges.

If you want to take this conversation a step further, you can point out how pervasive the use of credit has become in our culture. Used well, it is a convenience that allows us to purchase major items we need (there’s that interesting word again!) without having to save for them in advance.

When credit is abused, it can become like a drug that demands more and more and more, sometimes with no good end in sight. You will have to decide whether or not “drug” is the right word to describe this danger. However, it may have an impact and open your youngster’s eyes to the endless credit pitches that surround us.

COLLEGE AND BEYOND The topic of college almost always involves money, and families take many different approaches. Some parents offer to pay for half the cost of whatever college or university a student chooses. Others will pay for a public college or university and, if a student wants to go to a private school instead, he or she can make up the difference through savings, loans, earnings or scholarships.

If you are among the relatively few parents who are willing and able to pay for whatever education your youngsters want, this is a great gift you can give them. However, you may also consider the possibility of requiring your son or daughter to

pay some of the costs.

Good colleges and universities are challenging places. There are inevitable moments (sometimes entire semesters!) when the going gets tough and dropping out is tempting. If somebody else is paying the whole bill, you as a student may have less interest in toughing it out and staying the course in order to get what college has to offer. If you have some of your own sweat equity or savings invested, you might be more likely to stick with it.

Young people who are contemplating any form of higher education should be aware of the costs of public vs. private schools; and, of course, those costs can vary considerably from one school to another. Financial choices are always involved, and I don’t think young people should be entirely insulated from them.

Parents may think they are doing a son or daughter a favor by sacrificing, including going into debt, to pay for an expensive private school. Personally, I am not sure this is a good idea. Many young people are only too willing to accept the education they want regardless of how much it costs their parents. I believe the majority of young people would not want their parents to have to scrape by in their old age just to foot the bill for an expensive private college.

I suggest you talk about this with your kids before decisions are finalized. If you begin the discussion early enough, you may get your son or daughter to realize good grades can lead to scholarships, which can, in turn, lead to more choices. The sooner that conversation happens, the more likely it will produce beneficial results.



THE WEDDING I am not sure the concept of need versus want is ever clearer than when it comes to planning a wedding. If you have the desire and the means to put on a six-figure wedding for your son or daughter, there are hundreds (if not thousands) of consultants, experts and businesses who will be delighted to help you.

That’s one end of the spectrum. But for most people, lavish weddings are purely optional. At the other end of the spectrum, a license and a preacher or judge are all that is really required.

A friend of mine told me his son, who had little income and no savings, wanted to borrow $10,000 so he could impress his bride with a honeymoon trip to Hawaii. The son thought this was a fine plan, but the father, who was asked to foot the bill, did not see it quite the same way.

He gently told his son that going into debt for a wedding and a honeymoon was not the way to start a marriage on the right foot. The son could not find anyone else to finance the honeymoon, and the wedding turned into a nice outdoor ceremony at the home of an uncle, followed by a modest honeymoon. His new wife later said she was relieved they had not spent a lot of money on a vacation they couldn’t afford.

I don’t think it is a crime to disappoint your son or daughter when it is necessary or appropriate. I really do believe that “need” is a very interesting word when it comes to weddings and honeymoons.


SECTION TWO: YOUR ADULT CHILDREN

CHAPTER 3: Conversations with your adult children YOUR PROPERTY If you have adult children, there are two major topics you should discuss with them. This chapter focuses on the first one, your wishes regarding your property. In Chapter Four, I’ll discuss healthcare wishes and decisions that typically occur in the last months or weeks of life.

I have no wish to tell you what decisions to make on either of these topics. I will tell you why you should make those decisions and, after they are made, how to talk about them with your adult children.

Most of the people I know who have adult children love them very much and want nothing but the best for them. Yet many parents find it extremely hard to talk to their grown-up offspring about some really important topics with which they will inevitably have to deal.

Most of us do not want to think about letting others have the property, assets and possessions we have accumulated over a lifetime. But, you can do your family a huge favor by giving these issues some thought and then letting your relatives – most likely your adult children – know what you want.

A lot of families do not have these important conversations because they don’t know quite how to make it happen. I understand there is no perfect time or place. However, I know from personal experience that talking about them, even imperfectly, is much better than not talking about them.

Whatever you do, don’t put off this conversation forever. However well you manage to do this, simply by doing it you will be showing your children that you care about them enough to venture into some uncomfortable territory.

Here are some things to consider.

• Have these conversations sooner rather than later. If you wait until you are on your deathbed, nobody is likely to be at his or her best.

• Have these conversations after you have decided what you want. The more clearly you understand your own mind, the easier it is for everybody.

• If it’s at all possible, have these conversations in person rather than on the phone.

• Invite everybody who is directly affected. If one or more of your children inevitably must be left out, then make notes of the most pertinent points and use them to make sure you tell everybody the same things.

Ideally, these conversations will work best at a time and place that has lots of privacy and is free from distractions like telephones.

I do, of course, live in the real world, and I know that not everybody will be able to do this. Heck, pulling off any successful gathering is a big challenge for many families, even under the best circumstances. So how do you get your family to talk about important things that everybody would rather not have to discuss?

I don’t have a magic answer, but here are a few thoughts. Don’t expect it to happen perfectly. If we had to have perfect outcomes, we would probably never have families in the first place!



One approach is to invite your adult children over for dinner, followed by a movie or a game night. Tell them you want to talk with them about some important things you’ve been thinking about. If that won’t work, perhaps a friend or family member can help you plan something that has a better chance of turning out well.

If you’re getting cold feet, remember that your grown-up offspring and other family members will inevitably have to deal with these issues. I suggest you assume your adult children will be incredibly stressed to lose you as a parent. You can add to that stress by forcing them to confront questions that have no answers. Or, you can reduce that stress by talking about the issues ahead of time.

THE WRONG WAY TO DO THINGS When important conversations never happen, life-altering consequences can result.

Here is a true story about a retired engineer, a widower, who I’ll call Ron. He died at the age of 79 after a long battle with Parkinson’s disease. Though he had three grown children and three grandchildren, he never talked to them about what was in his will.

Soon after his death, his son and two daughters were stunned to learn what was in it.

One of his daughters was single, and the other was married with three young children. The son was not married but was in a long-term committed relationship with a woman who had done many kind things for the father, whom I will call Ron. That adds up to eight people: three children, three grandchildren, a son-in-law and a longtime committed partner.

Although they had no specific basis for doing so, Ron’s three children assumed they would receive three equal shares in his estate. This is a reasonable expectation.

However, for reasons they will never know, Ron had different ideas. In his will, he split his property seven ways, leaving equal shares to each of his three children, each of his three grandchildren and to his son-in-law. The longtime committed partner to Ron’s son received nothing.

Ron had every right to divide his estate any way he saw fit. His children had no legitimate “right” to an arrangement that they might regard as fair.

Nevertheless, Ron left his family more than property. He left them an emotional mess.

If you were the son or the unmarried daughter, how would you feel knowing that your sister and her immediate family got five times as much as you did? If you were the married daughter, and your immediate family had received five-sevenths of your father’s estate, how would you feel?

I’m not a psychologist, but it would not surprise me if the grandchildren, who were old enough to comprehend what was going on, also felt odd about their inheritances.

In the first few months after Ron’s death, relationships between his three offspring were quite awkward and at times badly strained. Did Ron intend or anticipate that? I doubt it. Three years after his death, his son and daughters are on better terms, but their relationships will never be quite the same.

YOUR TWO LEGACIES When you pass on, you leave two legacies. The first is your property governed by your will and your beneficiary designations. In Ron’s case, he accomplished what he apparently wanted.

Your second legacy consists of the relationships you leave behind, especially among members of your family. I doubt Ron intended to leave his family so upset.

Ron’s property distribution was quite unusual. Some might call it bizarre. “Adult children all tend to expect equal distributions” from their parents’ wills, says a Seattle attorney who has practiced family law for more than 20 years. She recalls only a handful of cases in which her clients deviated from this general expectation, even when one of the children had contributed a disproportionate share of financial or other support.

“This area is fraught with challenges because of three things: expectations, failures to communicate and relationships that are fractured,” the attorney said.

NO SURPRISES This leads me to one of the most important rules for dealing with serious matters such as inheritance: Leave no surprises.

Ron might have prevented some hard feelings, and some permanent questions that now cannot be answered, if he had told his family in advance what was in his will, and why. They might or might not have agreed, but at least they would have had a chance to discuss and understand the will.

Naturally, this is easier said than done. Imagine for a moment that you are Ron and you have made this non-standard decision about how you want your property distributed when you’re gone. How do you tell your unmarried son that you are not leaving anything to his long-time partner while you are leaving an equal share of your property to your daughter’s husband? How do you tell this son and your unmarried daughter that they will each get only one-seventh of your property?

Just to complete this picture, how do you tell your married daughter that she and her husband and their children together will pocket nearly three-quarters of your estate? How is this daughter supposed to feel about that?

Personally, I cannot imagine any good way to break this news. I asked the attorney how many of her clients had written wills that deviated from the expected, and then had done a good job of talking about it to their families. Her answer: Zero.

I realize this is an extreme case, but it is a true story that lets me make a few really important points.

A BAD COMBINATION Grief and animosity, sometimes with suspicion and manipulation mixed in, make a bad combination. I think you owe it to your children to try and not add new emotional issues at a time when everybody is already likely to be raw and sensitive. If you avoid surprises, you will also reduce the chance that somebody may try to contest your will. If your heirs go to court to fight over your property, nobody wins – except possibly the attorneys.

I am not in the business of telling people how to distribute their property. However, if I were giving advice, it would be this:

If you want to avoid surprises, take the time to think carefully about what your heirs may be expecting. Once you figure that out, don’t deviate very far from that scenario unless you have a compelling reason to do so – and you are willing to explain it to them.

Ron’s family was relatively simple: three offspring, no stepchildren, no stepparent and nobody who had been financially dependent on him. If he had left his property in three equal shares to his three children, there would have been no need for a conversation with them. If he’d had that conversation anyway, it would have been easy – probably a nonevent to the three children.

One of the most important rules: Leave no surprises



Now let’s imagine for a moment that Ron had some significant reason for what he was doing, but he just could not figure out how to tell them about it ahead of time without sparking a conflict he didn’t want to witness. Could he have done anything to mitigate the hurt he left behind? I think the answer is yes.

THE LETTER Ron could have written a letter to go along with his will, explaining his thinking. If he had done it carefully and thoughtfully, at the very least his family would know why he did what he did. They would have an answer, even if they didn’t like the answer, instead of only a question that can never be answered.

“I always tell my clients to put something in writing if your will does anything unexpected,” says Stoli. “You can tell them verbally, but people tend to hear what they want to hear. It is really important that you thoughtfully explain what you have done.”

A letter can be a very good idea in any case, a golden opportunity to affirm the affection that (I hope) you feel for your family members.

If you are going to write such a letter, consider these three points:

First, make sure your letter is authentic and reflects you. If what you write is anything less than totally believable, your heirs will not know what to think. In fact, a letter that even hints of phoniness could trigger endless speculation that somebody exerted undue influence over you.

Second, make your letter 100 percent positive. You may have mixed feelings about some of your children or other heirs and the choices they have made in life. That is fine, but this letter is definitely not the place to be negative in any way. This is the time to practice something you were told when you were a kid, “If you can’t say something nice, then don’t say anything at all.”

Third, do this very carefully. You may want to ask a friend or family member (somebody who is not an heir) to look it over for you. Remember, this letter may still be around in somebody’s filing cabinet (or DVD or hard drive or whatever) 50 or even 100 years in the future. Make sure that what you say reflects the way you want to be remembered.

You can write a separate letter to each person, but I suggest you also consider writing a single letter that will go to all your heirs. That way everybody has the same information and everybody gets to read the nice things you have to say about each person.

At the end of this chapter, I have included a sample to help stimulate your thinking about this important message. If you do this thoughtfully and authentically, you will leave a good “second legacy.” This is a good way for everybody involved to remember you in a positive light.

SAMPLE LETTER LANGUAGE The following sample letter may give you an idea of how to affirm your affection for your heirs. Tell them at least some of the thinking behind what you have done in your will. Do not copy this language. Instead, let it inspire you to discover your own unique message.

To my heirs: I’m writing this as a husband, a father, an uncle and a grandfather. You are the most important people in my life. I’m fortunate to have accumulated more assets than I need for my own use. When I am gone, I want you to benefit from them.

Carolyn: Carolyn, my dear wife, there is no way I can adequately thank you for the difference you made in my life. As you know, I left you my interest in our home and our joint financial accounts. You are the beneficiary of my 401(k), my IRA, and a small life insurance policy. In addition, you are the primary beneficiary of a trust that is to be created by my will, and this will provide you an income for the rest of your life. I hope that life will be long, healthy and happy.

Josh: As your father, I have always admired your intelligence, your curiosity and your integrity. I believe these qualities will continue to serve you well. After a lot of thought about the best way to leave some assets for your benefit, I have decided you will receive a series of annual financial payments that I hope will give you a base for your financial stability.

My nieces: To Kate, Pam, Heather, Molly and Linda, I have left a modest sum to each of you. I know it will not make a lasting difference in your lives, but I hope it will remind you of the big difference you made in my life.

Mary: I love having you as my granddaughter, and I admire your compassion, your empathy, and your cheerful disposition. Your grandmother and I have established a college savings plan for you. She can help you find the best ways to use this resource so you can fully become the person you are meant to become. Your parents can explain that, in addition to this, you are a beneficiary of a trust described in my will that someday will provide you a supplemental income for the rest of your life. I have no way to know when that income will start, nor do I know how much it will be. I do know that every dollar you receive will be a token of my love for you.

Mary, I am also leaving my share of the family cabin to you. It would be more common and expected for me to leave this to your father, but he already owns a share. I don’t see how he would benefit from owning more of it. I hope you will use your ownership to participate in its future in whatever ways you want to. I know this ownership brings with it a recurring financial obligation. Under the terms of the trust established in my will, you will have sufficient income to meet that obligation.



SECTION THREE: YOUR PARENTS

CHAPTER 4: Conversations with your parents If your parents have reached retirement age, you can be pretty sure they have at least thought about end-of-life issues. Ideally, they will initiate a conversation with you regarding their wishes and plans. This is a very uncomfortable area, and many people are happy to avoid such topics.

Your parents could be hoping at this very moment that you will bring up the subject so they won’t have to start the conversation. Or, they may be hoping that you will not! You will never know unless you test the waters.

Okay, so how should you do it? The only thing I can guarantee you is that there is no way that’s certain to be effective. This is family, remember?

I have a friend who used his own situation to get his foot in the door, so to speak. Over lunch with his mother, he said, “Mom, Janet and I have been spending some time lately thinking about how we’ll make sure the kids are taken care of in case something happens to us. I’ve got some life insurance that will help, but there is a lot more to think about than just that.”

He assured her that he and his wife were in good health, and they did not see anything bad coming down the pike. “We just know this is something we should do,” he said.

The son then talked in general terms about what he and his wife had been discussing. He said they had made an appointment with their attorney to draw up new wills. This gave him and his mother a natural opening to talk about estate planning, burial arrangements and related topics.

His mother was, of course, interested in the future welfare of her grandchildren, but she didn’t volunteer anything about her own plans (she was divorced). So, he broached the subject this way: “Mom, this has made me wonder if you have your own things in order. If you have some specific wishes, I want to make sure I know about them. I’m sure Christie (his sister) would feel the same way.”

Fortunately, his mother was amenable to talking about her wishes. My friend suggested that he and Christie come over some time that was good for her. Within a few weeks, they did so.

However you manage to initiate this conversation, your family’s particular situation will determine what topics you need to cover. Here are some questions that are almost always relevant.

• Do you have a will?

• Where is it?

• Who is the executor, and is this the best person?

• Who is your primary financial advisor?

• Who is your primary medical advisor?

• Do you have or want a spiritual advisor? If so, who is it or who should it be?

• Do you have a living will or a health care directive?



• Do you have a preference for a memorial service, funeral or something similar?

• What are your wishes regarding burial, cremation and the like?

• Do we (the adult children) know how to get in touch with your doctor, your lawyer, your financial advisor, your banker?

• Have you thought about who might want your personal property such as furniture, collectibles, etc.?

• Have you written a letter to your heirs (see my chapter on Conversations with Adult Children)?

In a list like this, these questions can seem clinical and cold. Every one of them is likely to have a strong emotional component. How you have the conversation is at least as important as what topics you cover and what information you exchange.

My friend and his sister knew this, and they agreed in advance that they would not try to cover everything in one sitting. They also made it a point to infuse the whole conversation with stories about family, memories, laughter and appreciation for one another. They were already good listeners, and they reminded each other in advance that when they were talking to their mother, listening was the most important thing they could do.

They never pressured their mother to make decisions she was not ready to make, and they didn’t try to influence the choices she was ready to make. They deliberately did everything they could to make their mother feel as if she were in the driver’s seat and in control.

The mother responded well to this, and after a few evenings over a period of a month they had covered all the important bases. The outcome was very positive. Their mother felt listened to thoroughly. My friend and his sister got the important information they felt they needed.

Somewhat to everybody’s surprise, these talks seemed to unlock a new level of intimacy among the three of them. They found themselves talking about feelings and beliefs that they hadn’t shared before.

You know, of course, that things won’t always go this well. Your parents may not want to talk about these issues. You probably will not do a perfect job of handling your side of the conversation. You may upset your parents. You may be the one upset. For one reason or another, you may never be able to have the conversation at all.

I cannot tell you how to fix those things. This is part of being human. I can give you some guidelines that will increase your probability of success.

Treat your parents with respect. Remember they have the right to their own desires and choices, even if you disagree. They also have the right to avoid talking about these things.

No matter how much or how little your parents have in assets, you will be on the right track if you always treat relationships as more valuable than things and money.

Remember, your family is not the first one that has grappled with old age, poor health and the prospect of death. Every family’s situation plays out in its own way, as I have learned from listening to many friends and clients.

Finally, do not expect perfection from yourself or your other family members. We are all human and fallible. Fortunately, we don’t get enough experience with these things to become adept at them. That is the way it should be. So give yourself, your parents and everybody else the opportunity to do the best they can.


SECTION FOUR: OTHER CONVERSATIONS

CHAPTER 5: Your health care and end-of-life decisions Probably one of the last things you want to talk about is whether or not you might someday wish to have somebody “pull the plug,” if you are medically incapacitated.

There are few things that can tear a family apart faster than being forced to make emergency health care decisions for a terminally ill, unconscious family member. If you care about your family – and for that matter, if you care about what happens to you – this is one of the most critical conversations you can have with your family, your physician and perhaps even your close friends.

This discussion is one you may want to have with your spouse or partner. It is one you may want to have with your parents. You may need to have the same discussion with your adult children. Because this topic does not fall exclusively into any of those categories, I have given it a chapter of its own.

The basic question, which has several specific forms, is how the people taking care of you will find a balance in giving you what you need without being too aggressive.

A legal document known as an Advanced Health Care Directive (AHCD), sometimes known as a living will, can help you pinpoint this issue and get your wishes down in writing.

If at some point you can no longer make decisions on your own, this document comes into play. It spells out your wishes concerning medical emergencies, incapacity, burial, funerals, resuscitation, pain control, nutrition, hydration and possible organ donations.

No document can address every contingency, and you will have a chance to specify who will have the authority to make decisions on your behalf when you cannot do so. If you wish, you can also use this document to designate a primary physician for your care.

Getting the blank form is not difficult. Any social worker should be able to help. Other common sources are hospitals, state healthcare association web sites, community and senior services organizations and geriatric care managers. If you have worked with an attorney on your will and estate plan, you probably already made the acquaintance of this document.

However, the subject matter covered by this form can require a lot of thought, so don’t put it off. Do not just shove the form into a filing cabinet after it is completed. If nobody knows about it or can find it, your AHCD becomes only another piece of paper. Make sure you speak with your physician and your family, and share copies of the document with everyone who is or might become involved. If you are hospitalized for something serious, consider bringing a copy of this document with you so the staff knows your wishes.

Here are common questions you should think about:

• If you stop breathing and have no pulse, do you want cardiopulmonary resuscitation (CPR) to be administered? If you answer yes, you are saying you want medical workers or somebody else to try to revive you. If you answer no, you are saying you want to be left alone to die a natural death. You may be asked if you wish to sign a DNR (do not resuscitate) order, which tells medical workers not to perform CPR if it would probably not restore you to a meaningful life. Of course, the definition of a meaningful life can vary from person to person, and you should consider discussing your views on this with your physician and family members.

A living will can help surviving family members cope with difficult health care decisions



• If you have a pulse or are still breathing when you face a crisis, what level of intervention do you want? You may choose comfort measures only to relieve pain and suffering. You may choose limited additional interventions such as medical treatment, IV fluids and cardiac monitoring. You may choose full treatment, which could include the items above plus intubation and a respirator, hospitalization including intensive care and possibly the use of medicine or electric shock to regulate your heart.

• If you cannot eat or drink, do you want medical workers to insert a feeding tube? If so, do you want it for only a trial period or an unlimited period?

• If your physician believes antibiotics could relieve your symptoms or discomfort or prolong your life, do you want them administered or withheld?

Like your will, your AHCD can be rewritten if your wishes change. It is a good idea to review the information every two years or if your health status changes.

No matter how carefully you draft this document to make sure it reflects what you want, I hope you will remember that on its own, it is still only a piece of paper. That is why you should make sure you discuss your wishes with your family and your physician. Even if they disagree with your choices, you will be doing them a favor by sparing them from making tough decisions when there may be no good options.

This will make it more likely that you are treated and cared for the way you want, and it certainly will help everybody else come to peace with whatever is happening.

CHAPTER 6: Leaving a business or real estate to your children Over and over again, my colleagues and I encounter clients who have not taken the time to discuss what will happen to the family real estate or other property that will require shared use and shared decisions.

Many parents leave a family home to their children, and most heirs manage to work out what to do. But, if you own a second home or vacation property – I often hear it described as “the house at the lake” or the family cabin -- things can get more sticky and complicated than you might think.

My clients often tell me some variation of “Oh, the kids get along fine, and this will not be a problem.” I always hope this is the case, but I know better than to expect it.

Here is my advice: Even if you are sure there will be no problem, bring up the subject so your children have a chance to talk about the property. If you are leaving them a “house at the lake,” here are a few obvious things to discuss:

• Do your heirs care equally about this property?

• Will they use it simultaneously, or will they take turns?

• If they take turns, can they agree on how to work out a schedule and resolve conflicts?

• Can they devise a plan for sharing expenses even if their use levels are very uneven?

• Would one of your children prefer to “be bought out” by the others?

• Who will be in charge of upkeep and maintenance?

• Is there somebody who everybody trusts, and who is willing to handle the finances?

You may think this is unnecessary. But, if you have ever tried to share a second home or vacation property with friends or relatives, you undoubtedly know some of the things that can go wrong. And you probably haven’t even scratched the surface!

I have a friend who is a partial owner, along with many cousins, of a piece of waterfront property that has been in his mother’s family for more than 100 years. The property has kept the generations and branches of the family connected. But some of those connections have been less than uplifting.

My friend is never at a loss for a story about the disputes and differences that can come up when relatives try to share a cabin with other relatives who have totally different standards of cleanliness, maintenance and decorations.

You may be thinking that nothing like this will ever happen to your kids after you’re gone. I hope you are right. But if you care about the property and care about your offspring, I suggest you initiate a conversation about it and get people talking to each other.



Your adult children may have quite different feelings about the lake property than you do. You may be quite unsentimental about a place that has given you rising maintenance hassles and expenses in recent years. Your children may care much more deeply about it than you do. On the other hand, they may care very little about it while they pretend to cherish it in order to keep you happy.

You will never know these things -- and even they may not realize them -- unless you talk about them. If once upon a time the house at the lake was a gift to your family when the kids were young, you can now make another gift to the family: an open conversation about what everybody wants to happen.

IF YOU OWN A BUSINESS A similar series of conversations should take place, perhaps more formally, if you leave any sort of business to your children. You may need to bring in some outside experts, depending on the circumstances.

Two key issues will lead you to the specific topics that need attention.

First, who will run this business when you are gone? Whether the next person in charge will be a relative, a manager already in place or somebody who will need to be recruited from the outside, you owe it to your heirs to give this your thoughtful attention.

Second, what will this person need in order to succeed? That is a very broad question that can lead in many valuable directions. If you are interested in teaching and guiding a new generation of leadership in this business, here is your golden opportunity. My advice is to take advantage of the occasion.

CHAPTER 7: Conversations between grandparents and grandchildren Part of my financial education began with my grandparents. I remember how careful they were about not wasting things. Long before recycling was popular, they habitually looked for ways to reuse simple things such as jars instead of throwing them out. They lived through the Great Depression of the 1930s, when goods were scarce and money even scarcer.

I remember my grandfather pointing out that a towel with a bad stain was still perfectly good for washing the car and cleaning up in the garage. In today’s world, it is extremely easy and convenient to acquire new things and to postpone financial pain by using credit cards. It was not that way when I was a girl, and it certainly was not that way when my grandparents were struggling to raise their families.

I occasionally rode my bike over to my grandparents’ house when I was going to spend the night. They continually reminded me to park my bike in the garage, but the message didn’t really sink in until I was grounded for leaving it out overnight.

Somehow, this punishment was easier to accept from my grandfather than if it had been imposed by my own parents.

Sometimes there is a special relationship between grandparents and grandchildren that allows lessons to be taught with less of the power struggle that can arise between children and their parents. Whether you are a grandparent or you have grandparents – a few people have the opportunity to play both roles at the same time – tapping into this relationship is one of the best ways to teach and learn.

Here are some ideas on how you can take advantage of this special relationship.

If you have grandparents, one of the greatest things you can do for them and for yourself is listen to them. I am thinking about far more than just heeding what they tell you. Ask them to tell you what their lives were like before you were born, maybe even before your parents were born.

What did they do for entertainment? How did they get in trouble? Did they play jokes on their pals and their parents? How did they get to school? How in the world did they manage to exist without mobile phones and the Internet? What were their hopes and fears? What did they want to do “when they grew up,” and how did their lives unfold? How did your grandparents meet each other? What were the hardest decisions they ever had to make? What were the most fun times they remember? Who were their closest friends, and what were those friendships like? What things in today’s world are the most surprising to them that they never would have predicted in a million years?

These are not necessarily financial conversations, but there is a wealth of perspective you can receive from encouraging your grandparents to simply talk to you about family history and family values.

One of the best parts is that if you consistently express an authentic interest in your grandparents’ lives and views, you may soon become one of their favorite people. Many grandparents have acquired all sorts of wisdom over the years, only to find that fewer and fewer

people seem to want to listen. If you make it clear that you do want to hear about them, you will have lots of opportunity to deepen a special relationship you will not always have available.

As far as I can tell, you have absolutely nothing to lose and everything to gain. The same is probably true for your grandparents.

There is a wealth of perspective you can receive from your grandparents



If you are a grandparent, you have a great opportunity to teach some important lessons regarding money. If your grandchildren are not interested in sitting still for a lecture on finance, don’t worry! Whether you realize it or not, you are always in teaching mode when your grandchildren are with you. You can be fairly sure they will notice everything you do and say, along with your attitudes and habits.

In other words, you are always teaching by example.

In the chapter on conversations with your young children, I talked about the difference between wants and needs. You might want to adopt this theme for some of your visits.

I think your biggest job as a grandparent is to have fun with your grandkids and introduce them to new places, new experiences, and new ways of seeing the world they live in. Everything counts, and sometimes the simplest things are the ones they will remember half a century later.

It is largely up to you how much – and how – you take advantage of this opportunity. Enjoy your grandchildren. Show them you are interested in what they think. If you let them take you into their world, you enrich their lives while they enrich yours.

In ways you will never know, you are shaping their future.

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Conversat ions Conversat ions - Merriman · We spent several days scouring his home for a copy of the that he had told will me hehad written. What we found instead were copious notes