Friday, October 6, 2023

The Inheritance Talk: Why Money Mindfulness Is So Difficult--and Important


"The New York Times Advertising: T Brand Studio seeking a psychologist or sociologist who can provide deeper scientific context on why people avoid having financial conversations, especially the inheritance talk, why talking about money triggers stress and how to start having these critical conversations. We'll also talk specifically about the inheritance talk and why the lack thereof can cause turmoil among family members (Sept. 12, 2023 email).

"We’re never really taught that we have to think about our work before we can do it…Thinking in a concentrated manner to define desired outcomes and requisite next actions is something few people feel they have to do (until they HAVE to).  But in truth, it is the most effective means available for making wishes a reality." ---David Allen, productivity expert, Getting Things Done (2015)  

“The Baby Boomer generation is expected to leave a significant amount of money to their Millennial children. It's estimated that more than $68 trillion will be bequeathed to their offspring. The great wealth transfer is expected to make Millennials the richest generation in American history” (Forbes, Aug. 9, 2023).

Cultural values are the shared reality that drives perception, decision-making, and action (see my website below).  Wealth and money are essential to group well-being.  Wealth transfer between generations takes knowledge, talent, diplomacy, and a wide view of the interests and rights of others.  The stakes are high.  But few have the vision or practice to enter into negotiations with their parents as well as adult siblings that the inheritance talk requires. 

This is largely because money is one of the least-discussed topics in any relationship – less than sex, religion, or politics. Why? Because finances are a minefield of uncritical thinking, involving history, status, hope, regret, self-worth, and how we value our relationships.  This may be the reason that only one out of three people in the US have any estate plan or even a will.    

Abe Lincoln died without a will (despite being a lawyer).  He didn’t expect to be assassinated. Next century: Worth over $500 million today, since his death in 1981, singer Bob Marley’s complex estate (no will) has attracted dozens of claimants.  Jimi Hendrix likewise had an estate missing a will.  After his death in 1970, the battle waged over his assets continued until the end of the century.  Howard Hughes died in 1976 at age 70, again, without a will.  Although one was “discovered” at the Mormon headquarters in Salt Lake City, it proved to be a forgery.  Eventually the billionaire’s holdings were divided among 22 aides, charities, and former lovers.  (Source:  

Family life operates by pre-assumptions—those habits of thinking that are unmindful about how things operate—especially around finances.  Very few families can be open and above board about how funds are managed or allocated. Even less-often shared is the rationale, the WHY behind HOW things operate—investments, expenditures, loans, savings, bequests, and long- and short-term goals. 

The Inheritance Talk needs to establish two things:  First is what the family has, and second, how these assets will be shared out--now and for the future when elder parents decease.  Both topics are hotbeds of potential conflict and confusion, leading to the need for clarification, correction, negotiation, and change. This is the time when assumptions are challenged and family secrets unveiled. None of these is anything family members seek out.  Nevertheless, The Conversation, freighted as it is with these perils, is essential to moving forward from past to future. 

This complicated talk about family money is far more than a meeting about numbers.  It can’t help being a judgment on the way Mom and Dad have handled—or failed to handle—assets and opportunities over time.  The discovery process is legitimate in its need to know how things stand and where they are headed.  Ideally, this scrutiny might go just fine, showing sound management over decades.  But more likely the close examination is going to reveal some flaws or possibly frauds—answering the question of why people are generally resistant to this audit process.  (We don’t like the IRS inviting us in to talk taxes, either.)  

Faults and inconsistencies will emerge, which means these can no longer be ignored or assumed to be unproblematic.  And financial arrangements between parents and siblings will come to light, raising jealously about favored compared to less-favored kids.  This is when you suddenly discover that the family house will not be sold and divided, but a caretaker child, or one cared for, has been given the right to live there indefinitely.

The Talk makes any assumptions clear and stays the ambiguity.  A common example of discovery is favoritism among adult children and uneven or strange-looking distributions.  Suddenly the actual operating assumptions showcase the unmistakable need to articulate reasoning, make fairness arguments, assign responsibly and/or blame, and press concerns about the future needs and rights of offspring (and surviving parents).  Now conflict avoidance is no longer possible, and the truth of things looms directly in the family’s faces, impossible to ignore.  It’s a moment of truth that often comes too late to save either feelings or finances.

This is why it is so critical to make things transparent all along, with the help of advisors, estate attorney, financial planner, or CPA and daily money manager providing counsel.  Many parents really do hope they will be spared The Talk and safely gone before having to do the right thing becomes necessary and unavoidable.  But the far better alternative is to get and keep the financial house in order long before that, getting everyone on the same page over time, through inevitable ongoing changes in the family picture.  Everyone is aware of this principle.  Few see full disclosure practiced.

Financial literacy, the ability to understand and apply financial concepts to managing personal finances, peaks in the early age 50s, when fewest mistakes are made.  This is the age when people have “accumulated knowledge and experience about money, spending and saving, but haven’t begun losing key analytic cognitive skills” (ARC Centre of Excellence in Population Ageing Research, Australia, 2023).  This means adult children are at or approaching their peak ability to read and repair the family financial landscape, while at the same time, their parents have passed that point and need help, whether requested or not.

In South Philadelphia where I live, I ran into a seventy-some man on his way to Italy.  His mission is to try to get in writing his ninety-some father’s promise of properties in that country under Italian law.  I wonder how that’s going for them?

Photo: Pixabay