Essential money conversations retirees should have with family
Discussions about funding retirement, aged care and inheritances may be uncomfortable. However, not having them risks your wishes going unmet and family conflicts where details aren’t clear.
Hence having discussions about money while you are able to is one of the best (and cheapest!) investments you can make – for both you and your family.
Precisely what those discussions entail will depend on your circumstances – and theirs. Yet many points apply almost universally:
What matters to you
Even the best laid plans mean nothing if those responsible for enacting them don’t know what they are or understand your reasoning behind them.
Your will provides a legal overview of who gets what upon your death, while nominated beneficiaries determine how assets are divided from superannuation and some other structures.
A separate letter of wishes can informally share your wishes, covering more than just legalities. Sharing this before your death allows family to clarify your wishes and ask questions.
Go through:
- How your money should be managed now and longer term (e.g., you may want money set aside for grandchildren’s education, or have instructions for a dependent’s ongoing care).
- Funeral arrangements; cremation or burial; where you will be laid to rest.
- Plans for anyone other than direct family, charities etc.
- Any non-negotiables among your wishes.
Partner protections
Ensure your partner knows how they will be looked after if they outlive you. Similarly, your kids should know what if any support they will need to provide – especially important for blended families.
Where beneficiaries have divorced/separated, will you exclude their ex from your estate? Are your records updated to reflect this?
Ensure everyone knows the difference between joint tenants and tenants in common for property owners – only one automatically leaves your share of the property to your co-owner.
Health matters
How do you want to be looked after in your final years? Don’t assume your loved ones already know everything.
Communicate your wishes, small and large – medications, dietary requirements, retirement living, palliative care, resuscitation.
Discuss whether power of attorney and enduring guardianship are needed should you be unable to make decisions over your health and finances (e.g., due to dementia or stroke), and who will assume those responsibilities.
Family legacy
Consider the legacy you want to leave and whether this aligns with your family’s expectations.
Is dividing assets equally among your children really fair if one is well-off while another struggles or has complex needs?
Do your plans on inheritance unwittingly create headaches for the recipients – such as leaving property to someone who cannot afford to maintain it, or tax liabilities that eat into any financial gain?
Discuss non-financial legacy too: do your offspring know about your (and hence their) heritage? Are there special family mementos/stories to pass on? This knowledge may be lost if you don’t share it now.
Place to call home
Given their financial, logistical, and emotional implications, living arrangements are crucial to discuss before things need to change (and change can be imposed suddenly, such as by a health emergency).
Consider:
- Where would you want to go if you need high-level care?
- Is your current home suitable in your advanced years? How would any required modifications be paid for?
- Would you move nearer your kids? Downsize, upsize or sea/treechange?
- If you move, would you need to sell your current home? Could it be retained somehow?
- Do you want/expect kids to care for you? Are they capable of doing so?
- Could/would you live with one of your children? If so – such as paying to build a granny flat on their property – how does this affect your will? Would they be forced to sell so their siblings receive their inheritance?
Team united
Having everyone on the same page helps things to run smoothly – especially during difficult times such as a death or serious illness in the family.
Stay aligned by:
- Introducing adult children to your financial adviser, lawyer, and accountant.
- Ensuring everyone knows where to find your will and who is your executor.
- Disclosing what is and is not up to date.
- Providing contingency access to passwords, important documents, keys etc.
- Sharing relevant policy details (e.g., life insurance).
These discussions may be sensitive and difficult to initiate, but are crucial to ensure your wishes are known and enacted. Plus, they may encourage your loved ones to think about their own wishes – and give you all peace of mind for the future!
Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press, $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at www.onyourowntwofeet.com.au
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