When should one share financials with their children?

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FIREchief
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Re: When should one share financials with their children?

Post by FIREchief »

Thanks for the great post! :beer
Nords wrote: Sun Aug 23, 2020 5:28 pm Today my spouse, me, and our daughter are all co-trustees of our revocable living trust. (The trust only holds our home and our rental property.) Our daughter has a DPOA on all of our investment accounts, and they’re also all TOD/POD. Finally she’s a joint owner on our checking accounts.
Is there a reason that you didn't just change the ownership of the checking accounts (and other after-tax accounts) to your revocable living trust? :confused
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Nords
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Re: When should one share financials with their children?

Post by Nords »

FIREchief wrote: Sun Aug 23, 2020 5:44 pm Thanks for the great post! :beer
Nords wrote: Sun Aug 23, 2020 5:28 pm Today my spouse, me, and our daughter are all co-trustees of our revocable living trust. (The trust only holds our home and our rental property.) Our daughter has a DPOA on all of our investment accounts, and they’re also all TOD/POD. Finally she’s a joint owner on our checking accounts.
Is there a reason that you didn't just change the ownership of the checking accounts (and other after-tax accounts) to your revocable living trust? :confused
There doesn't seem to be a compelling reason either way for checking accounts and investment accounts.

For example, the DPOA with Fidelity is on their form and our holdings are displayed in our daughter's account as well as in our account. (She uses the same login that she's always used for her Fidelity account.) Fidelity's a lot more cooperative with their legal documents than with a Hawaii RLT.

We had a similar discussion with Navy Federal Credit Union about retitling our checking accounts into the RLT. I don't remember the details but after about 10 minutes we concluded "your corporate policy is too hard" and we just went with a joint designation.

On the other hand, a RLT is a better way to transfer title of real estate than a DPOA (at least in Hawaii). The legal concern (with title companies and title insurers) is that our attorney-in-fact with a DPOA could sell our house while we were disabled. Then if we regained full cognition (perhaps recovered from a coma) we could object to the sale and file suit to put the title into jeopardy. I don't know how valid that legal concern may be, but it was enough to make the RLT a simpler way to go with title companies, title insurers, and possibly property managers.

The RLT discussion only came up after we'd reviewed all of our other assets and then looked at the real estate. Otherwise we would've done everything with DPOAs, joint designations, TOD/POD, a real-estate TODD, and a pour-over will.
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flaccidsteele
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Re: When should one share financials with their children?

Post by flaccidsteele »

Nords wrote: Sun Aug 23, 2020 5:28 pm We reached financial independence when our daughter was seven years old, and we’ve been sharing our financials with her since then. We kept it simple and age-appropriate through middle school. (“Enough for everything we need for the rest of our lives, and a little extra for fun.”) When she was in high school we shared more details. They looked like “really big numbers” to her, but that was the teachable moment about making our assets last for life. We also let her know about our “In Case of Emergency” folder with all of our account numbers and passwords. If she needed to step in during our disability or death, she had all the info to get started.
+1 ^ fantastic post

It’s also important to us for the next gen to understand money

We were already financially free before our child was born

I didn’t want our child to think that what we had was a lot because much of what we think is possible is our perception

When I was a kid I thought $1 million was a lot, and it took me awhile to deprogram myself into understanding that it wasn’t

At 8 years old she realizes that a million isn’t a lot. And when she becomes an adult, it definitely won’t be

We understand that $10m is considered a reasonable number to have without much sacrifice
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
RobLIC
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Re: When should one share financials with their children?

Post by RobLIC »

When everyone is together, healthy and in a good mood.

My mom is your age and lives in another state. I didn’t — and don’t — want to know dollar amounts, but I did want to know several dozen things that would be necessary if the worst happened: security code for their gated community, alarm code for the house, address of bank with safety deposit box (a lot of those seem to be changing now as banks close branches), contact names and phone numbers for anyone at Fidelity or other places where they had assets, location in the house of important keys, computer passwords. Kids and step kids and how they wanted that to work and how it was specified in their will. Location of wills ... health care instructions etc. Burial instructions. Ugh.

We got it done in one difficult, but otherwise tension-free day. My siblings and I know what’s essential to know. The actual numbers, to me, feel irrelevant. I just wanted the road map for what to do, during what will no doubt be an awful and hopefully long-off time.
ReadingBA
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Re: When should one share financials with their children?

Post by ReadingBA »

I agree one should start sharing information with children, starting in your 60's. AARP has a really great book about how to go about this, covering not just financials but also medical and other sensitive topics like driving. It's called 'The Other Talk: A guide to talking with your adult children about the rest of your life.'
We made lists of medical information, insurance, and financial accounts and gave it to our twp adult children 2 years ago, along with copies of our wills and trust. We did not share particulars of our finances, just information about accounts. For the digital information, we use a password manager and it has a function to designate someone to have emergency access. This would give access to whatever accounts are active at the time. The request from the designee for emergency access is relayed to the password account owner, and we can designate how long to give ourselves to respond before the emergency designee is given access to the account - 48 hours or longer if desired.
Having assisted my Dad for seven years leading up to his death, we learned first hand how important it is to share this information.
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WestUniversity
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Re: When should one share financials with their children?

Post by WestUniversity »

My father had me as a signer on several accounts and he had a binder that compiled investment information, bank information, insurance policies, safe deposit box keys, anything financial in nature, as well as his DNR, medical power of attorney and durable power of attorney. It was invaluable in managing his finances during his decline in health and ultimately in settling his estate. He shared the information at the outset of a health diagnosis that proved ultimately fatal after about two years...
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