Discussions about family wealth can be difficult, complex and emotional. But, having honest and open dialogue now can help avoid problems in the future.
History is replete with stories of families falling out over inheritances and getting locked into squabbles that last years (while the estate slowly dwindles away). It’s also the stuff of TV and film drama, most recently in the hugely popular Succession, which saw the Roy family tearing each other apart over a multi-billion-dollar estate and control of the family media empire.
These are extreme examples, of course, but estate planning and inheritance can be a very challenging and emotional matter – irrespective of whether an estate amounts to tens or hundreds of thousands of pounds, or up into the high millions. And it’s a situation that can be made all the more difficult if meaningful conversations between the generations haven’t taken place well in advance.
Research by RBC Brewin Dolphin from 2023 highlights how this lack of communication is commonplace – with 58% of people over 55 who were surveyed admitting they haven’t discussed with their children whether they plan to pass on money.
This can also create a disconnect between what parents plan to do and what their children or grandchildren are expecting. In some cases, children may anticipate a significant inheritance that doesn’t materialise – in others, they may be expecting little or nothing, but all of a sudden receive a major windfall they don’t know how to manage.
Indeed, the RBC Brewin Dolphin research showed that almost half of the children under 55 with living parents said they never expect to receive financial help, yet more than nine in ten parents with more than £1m in savings and investments intend to pass on wealth during their lifetime or when they die.
And this is a key distinction. Wealth transfer isn’t just about inheritance – it often happens during your lifetime, making open conversations even more important.
While talking to your family may sound like the most natural thing in the world, money remains a sensitive area for many people. Chris Matthews, managing director at RBC Wealth Management in the British Isles, says he’s witnessed, “a lot of shame, guilt and embarrassment” among people forced to consider their own wealth.
On the flip side, some parents might be nervous about spoiling their children or grandchildren too early, when they don’t have a good understanding of money management, and could potentially make questionable financial and lifestyle choices. As a result, they simply avoid discussing the matter altogether.
The taboo around talking about money seems especially strong for the famously restrained British. National Numeracy , the social mobility charity, found that a quarter of UK adults are ‘silent savers,’ preferring to keep money matters to themselves – often until dramatic life events, such as serious illness, make sharing information a necessity.
But as Chris Nolte, investment manager at RBC Brewin Dolphin, explains: “announcing that you’ve got six months to live and telling your children that they’re going to receive x amount of money is never a good place to be.”
While reticence to talk about money has its place, it can clearly be problematic. By starting these conversations now, you can help your family understand your decisions, avoid future misunderstandings and ensure your legacy reflects your values. Simply ‘kicking the can down the road’ or refusing to broach the subject of money altogether risks pulling families apart.
While having conversations with family is important in establishing what your beneficiaries can expect after you die, it can have a far more significant impact during your lifetime, including opening financial-planning opportunities.
Talking to your loved ones might reveal challenges they’re facing, enabling you to make a more informed decision about how to pass on your wealth. For instance, if your children need help buying a property or funding your grandchildren’s education fees, then a carefully considered gifting plan could allow you to pass on a bigger financial legacy, while also helping to mitigate inheritance tax (IHT).
You might also discover that they’re in a far stronger financial position than you realised. “I help advise a couple who have four kids, all of whom need different levels of financial help,” explains Nolte. “Some are buying houses while others are getting married. Three of the four are doing jobs that don’t pay highly, while one is doing really well – so the parents have been helping out the three while creating an estate plan that will help ‘rebalance’ matters later on. Without having had open conversations, none of this would have happened.”
While starting these wealth conversations as soon as possible makes perfect sense, it’s worth noting that they should never just be ‘one and done,’ but rather an ongoing exchange. As Stephen Ritzema, director of the Fiduciary Specialist team at RBC Wealth Management in the British Isles, says: “handled correctly, parents and grandparents should be able to enjoy discussions with family members that are open, honest and fruitful. They may even find themselves gaining a better understanding of their heirs, and of their values, dreams and capabilities.”
This could open doors for parents and grandparents, during their lifetime, to support the younger generations and gain a real sense of fulfilment from seeing how they’ve helped out.
It’s also essential that any conversations with heirs and family are aligned with the advice from your wealth manager. This helps position any gifting, inheritance tax and estate planning as part of your holistic financial strategy. As much as you might be passing money on, you need to be sure that your own needs are going to be met in retirement, for instance.
And in some cases, having an adviser in the room when you have conversations with your children can help things go more smoothly. Experienced advisers are skilled at guiding families through the discussion and drawing out what each person may want or need. They’ll explain the ins and outs of complex matters like gifting, trusts, IHT and whole of life insurance, so that everyone understands why certain plans are being put in place. They’ll also help to answer any questions you and your family may have.
Conversations around family money and inheritance may be difficult to begin with, but they can help develop a whole new level of understanding between family members that, ultimately, can pass from one generation to the next.
Here are nine questions that can help kickstart some all-important family conversations around money:
Living well for longer means ensuring your wealth supports your family’s future. Open conversations today can align your plans with your values and empower your loved ones to thrive. At RBC Wealth Management, we’ll help you navigate these conversations to help ensure your plans secure the future you want.
We want to talk about your financial future.
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