By Alice Edwards, Solicitor at Winckworth Sherwood
With the cost of living crisis, rising interest rates and proposed tax changes, our personal finances are currently a topic of daily public debate.
Why, then, do so many of us find it difficult to discuss money with those closest to us?
From our income and outgoings, to savings and debts, most people prefer to keep financial matters off the agenda when it comes to conversations around the dinner table.
Part of this is probably the social aversion to discussing money – which can be seen as gauche or tactless – carrying through into home life. There may be additional factors at play in the family context; embarrassment, fear of judgment and a sensitivity to the feelings of others all result in a reluctance to tackle the issue of money head-on. In particular, parents and their children may prefer to avoid discussing what would happen to their money in the event of their death – even mentioning this topic can result in the conversation being closed down.
This is a missed opportunity, because a little openness around financial matters can be hugely helpful when it comes to estate planning. From a parent’s point of view, knowing how well one’s child is able to manage their own money can be a good indicator of their ability to handle a large inheritance. For a child, having an idea of what to expect in the way of lifetime gifts, or on a parent’s death, can assist greatly with decisions over housing and school fees. For both parties, a degree of openness around post-death plans can avoid any unhappy surprises – particularly when a parent is no longer around to mediate between siblings. We have seen an increase in estates which become contested, and the resulting time, cost and stress could sometimes have been avoided through better planning and more transparency during lifetime.
How best, then, to approach the conversation? It is important to note that discussing matters won’t be right for everyone – you or other family members may have good reasons for wanting to keep your finances and plans private, and those should be respected. But for those families where everybody is open to a little more communication, the following may help:
- Save discussions for a point when your family are relaxed and have time to sit down together.
- Equally, avoid commandeering a family celebration or planned gathering – better to wait until everybody is able to give their full focus to the matter in hand.
- Explain your reasons for wanting to have the conversation – your family are more likely to pay attention if they understand that it is something that you have given some thought to.
- If it is helpful, open the conversation at a high level – talk about your broader goals and plans, before focusing on the money aspects of these.
- Don’t just talk about money – it might also be a sensible time to discuss personal belongings, later life care and funeral plans.
Finally, remember that discussions with family are only part of the estate-planning picture – it is very important to ensure that your wishes are enshrined in a properly drafted will, having first taken legal advice.