It’s tempting to put off talking about death and money. After all, who really wants to face their own mortality? Couple that with the potential discomfort about revealing specific details about estate plans and it’s easy to see why many families still avoid the topic.
Yet in a surprising new look at the matter today, Fidelity Investments released results of its Family & Finance Study showing a big gap between what parents claim they have told their children about their future legacies and what kids say their parents have actually revealed. Indeed, while 70% of parents surveyed reported they, “had detailed conversations,” according to the findings, more than half of their children say this isn’t the case.
Why the disconnect? “The fact is, taking the time to sit down as a family to discuss retirement issues with mom and dad can be a time consuming, not to mention potentially contentious task,” says Kevin Ruth, head of wealth planning and personal trust at Fidelity in response to questions by e-mail. “So it’s completely understandable many families put it off and want to postpone the discussions until the last possible minute.”
Fidelity also found some confusion among families who may discuss estate planning, but not frequently or in detail: seven out of 10 parents and children have misconceptions about the value of their parents’ estate, according to the survey. On average, children underestimated their parents’ estate value by $278,000.
The survey provides an unusual glimpse into family dynamics because it queries parents and their children separately to gather different perspectives across the generations. (In this case, the survey sample included 1,273 U.S. parents and 221 adult children and was conducted online last spring.) While there’s a discrepancy between parents and their kids about what they’ve discussed, those surveyed do agree on one thing: 90% of parents and their children “say it’s important to have frank conversations about estate plans and wills,” according to Fidelity. And yet some parents clearly do not want to discuss will and estate planning except in vague terms; 31% of the respondents indicated they do not want their children to count too much on their future inheritance, Ruth notes.
All families clearly stand to benefit from having an open and ongoing dialog that includes providing specifics about the estate such as where documents are and who will serve as executor of the estate. These talks can also potentially aid with tax planning, protecting privacy and ensuring liquidity and the ability to pay bills all at one of the most difficult times families face.
“It is important for families to begin conversations about finances before there is a need to have the conversation,” according to Ruth. “Delaying conversations until a life event forces the subject means making decisions during a time of crisis that are often driven by emotion — by this time, options are fewer and time is tight — having conversations and a plan of action well before one must make a financial decision allows family members to take more time anticipate, plan and make informed decisions, rather than decisions driven by emotion.”