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Family Financial Planning: Keeping it Real

Financial columnist Carl Richards recently posted an interesting article in his New York Times Bucks blog, “A Simple Place to Start: Your Net Worth .”

Carl’s article addressed how many of us feel intimidated about even starting our financial planning in such a complicated world. There are psychological challenges, not to mention that swiftly ticking clock. His sensible advice is to keep it simple. Tear out a piece of paper from the nearest notepad. Draw two columns for your assets and your liabilities. Figure out what you’ve got and what you’ve not. Presto, estimating your net worth is the first important step within a sound financial plan.

This got me to thinking. This is a great idea for your own household, as Carl suggests. It’s also a fantastic idea for those who have been sweating over how to begin a conversation about family wealth across generations.

You’ve all heard or been involved in similar stories, no doubt. I’m aware of one family in which the son was named to act as his father’s successor trustee, with his mother as beneficiary, and he and his siblings as future beneficiaries. Unfortunately, there was no advance conversation about any of this until after the father’s funeral. Talk about an unwelcome surprise! While the roles may have been exactly appropriate for the circumstances, by springing it on everyone involved after the fact, this family lost an important opportunity to make the best, instead of the worst of the challenges they faced sorting through their new and unexpected financial relationships.

Are you a son or daughter of aging parents? A parent with adult children? Maybe you’re a member of the sandwich generation: both at the same time. Imagine applying Carl’s simple idea across the households in your family. Sitting down together with your trusty notepad (or you can even use a napkin like Carl does), could be a simple, effective way to begin the conversation about family wealth planning. The exercise may end right there. Or it may help you springboard to larger conversations. Either way, calculating net worth is a worthy start.