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How much will you leave the kids?

By Jennie L. Phipps · Bankrate.com
Wednesday, July 9, 2014
Posted: 2 pm ET

Should you tell your grown children how much money you have to live on in retirement? Should you share an estimate of how much of it you plan to leave them when you die?

The answer is a firm "yes," says Fidelity Investments, which has studied this issue and other topics related to families and money twice in the last three years. "When you take the time to have these conversations, they increase peace of mind and decrease anxiety," says Fidelity's Lauren Brouhard, senior vice president, retirement strategies. "They strengthen a parent's sense of preparedness. They help adult children understand their parents' wishes and financial status, and if adult children are asked to accept real responsibility for their parents later on, they are more ready to handle it. It's a disservice not to have these kinds of conversations."

Not everybody sees this issue in the same way. While 75 percent of parents and their adult children agree that there should be some version of this conversation, there is a lot of disagreement about what should be discussed and when.

Nearly 50 percent of parents and their adult children say they aren't very comfortable talking to each other about these issues. About 30 percent of parents say they are reluctant to talk about their retirement planning with their adult children because they don't want them to count too much on their future inheritance.

Get it out in the open

Fidelity says the data show that failure to share information creates major misconceptions among family members, especially about who will provide care for ailing parents. Some 43 percent of adult children expect that they or a sibling will care for a parent if he/she becomes ill. Of course, only 6 percent of parents expect to get that kind of help from their children. The realities could be much different.

There is also a considerable disconnect between what parents expect to leave their adult children and what the children think they'll inherit. On average, adult children believe that they will get $300,000 less than their parents hope to leave them.

"Money is a taboo subject for many parents and their adult children," Brouhard says. "But the only way to close the information gap is to open the discussion."

She recommends that parents who are uncomfortable about having these discussions take charge and decide the content of the conversation in advance -- who will attend the family meeting, what needs to be discussed, what should be decided, who will be executor of the estate and who will have power of attorney when the time comes. "This isn't a democracy," she says.

The reward for frank disclosure is serenity. Of parents who have had these discussions with their children, 93 percent say it brought them greater peace of mind and 73 percent said they thought that down the road, it would improve their children's state of mind.

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17 Comments
Richard Raney
July 18, 2014 at 9:24 am

Most important for a parent is to have a booklet with all the names, addresses, phone no. and ext. of your affairs. Keep it up to date which will make it a lot easier on your children when time comes for them to do the paper work to close out your obligations. Some of these items need attention within six weeks of death.
Also, have at least a Will drawn up, or better yet, a Living Trust, save them a lot of money in long run. Keeps from paying a Lawyer money they could have gotten.

Richard Raney
July 18, 2014 at 9:17 am

Most important is to have your affairs up to date. All items that need attention and addresses, as in who, what and where. Make it a lot easier when time comes for them to take care of your affairs. Smart people do a Living Trust, who cares pers. do not have wills and kids pay the price in Probate, paying lawyers money they could have had if parents did any kind of fin. planning at all.

John C
July 16, 2014 at 6:27 pm

I agree with tell your children about your estate and who is going to get what but feel you shouldn't go into details about the amount of say $ stocks and bonds ..I would tell my children I have stocks & bonds for them to inherit but not the amount ..

Cindy
July 16, 2014 at 4:32 pm

While currently dealing with my own father's estate as executor, the biggest lesson learned is to have your affairs in order, communicate and document the who, what, where of your finances, property, etc. in a clear manner and keep your information up to date. If you don't trust your children to handle your final affairs appropriately, coordinate a third party to handle the final details and tell your children upfront that's what's going to happen, end of story. Our situation was that one adult child and the parent's long time companion were the major beneficiaries, while the other adult child fronted the final burial costs of the parent with no guarantee of recompensation which should have been covered by the estate. Neither child was informed of the situation until after my father's death, so it's been painful trying to track down each and every item of the parent's finances to close out the probate in a timely manner. Luckily, my sibling and I have an agreement that at the end of the probate period, what ever expenses are left will be settled out of his inheritance since nothing was set aside to cover even these basic bills.

After this experience, my husband and I are getting our affairs in order now so our children won't be burdened with trying to figure everything out during the worst times.

Nicole
July 12, 2014 at 5:07 am

Hi, I think it is extremely dextrimental that we tell our children about of life insurance policies for several reasons. Proper preparation prevents a poor outcome & why not communicate about something thats sure to happen without a doubt (death). During a time of a lost love one theres no room for not knowing what to do & how to go about doing it. Whats the point of having a policy for your children if you dont give them all the details, grant this is a very very hard topic to disscus but it has to be done. Knowing that when the day come your children would be confident knowing what to do. knowing is better than not knowing.last but not least we want our children knowledgeable when its time to make that call for us.

Carrie Johnston
July 11, 2014 at 12:40 pm

Way to go Roxanne! My sentiments exactly. We gave our children a good upbringing,college educations. They have wonderful childhood memories, including nourishment of the heart and soul and that will be their most important inheritance of their parents "lives well lived." I've seen (and heard here) about "inheritances" tearing families apart and I never want that to happen to mine, as no parent does. Having a good solid will, and leaving our children with no expectations, will hopefully alleviate that problem.

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