Family inheritance talk: How to build trust and plan for tomorrow

An older woman talks to her children and grandchildren

Parents and young adults alike are reluctant to talk about inheritance. So what’s the right way to build trust and work toward this needed conversation?

It’s human nature to avoid uncomfortable conversations. Parents often prioritize having discussions with their children about health and personal safety even though it can be tough to broach topics of a personal nature. But equally important but often avoided are conversations about financial health. In families of means, this includes “the inheritance talk.”

And the avoidance is a widespread problem. For example, Versta Research recently conducted a national survey on behalf of Wells Fargo Wealth & Investment Management, asking questions of adults in their 20s and 30s who expect to inherit $1 million or more from their parents. What that research shows:

  • Nearly three-quarters of respondents said that talking about an inheritance would help them plan better for the future.
  • More than half wish there was more transparency in their family about money.
  • 22% of female respondents feel that they have been treated differently by their parents when it comes to financial discussions specifically because they are women.

So how can young adults help lead a change where financial conversations — including the inheritance talk — can happen routinely, openly, and without gender bias?

Stephanie Duignan, senior vice president-senior lead family dynamics specialist at Wells Fargo Wealth & Investment Management, says that the key to having a meaningful conversation about inheritance is to work up to it, instead of jumping in abruptly. Here, she shares how to do it.

Understand the concerns on both sides of the inheritance talk

To plan for a meaningful conversation about inheritance, it can help to understand what keeps each side from opening up. “Our experience is that parents are trying to avoid raising entitled children — they worry what the wealth could do to their children’s motivation,” Duignan says. “The children don’t want to stir up conflict, and they don’t want to seem greedy, nosy, or unprepared.”

The takeaway for parents: Being perceived as entitled — even if it is not the reality — is something both you and your children likely want to avoid. Knowledge is not the cause of entitlement, however, so don’t let that concern keep you from talking about inheritance.

The takeaway for the young adults: It’s important to build trust by talking about your own finances — your plans and goals, and where you might want advice — to help alleviate these concerns.

Start talking about values

The path to talking about inheritance starts with this step: talking about the legacy that parents want to leave, attitudes toward giving and social impact, and the role they want money to have in the family’s future.

“These early conversations are about education and helping the younger generation learn about being good financial stewards,” says Duignan. “One of the things we learned in our research is that what the younger generation most wants to inherit from their parents are values. And the good news is that those conversations can open the door for other financial actions you can take together.” Learn more about bridging gaps in family conversations about money.

Work together on a family financial task

The next step in building toward more difficult financial discussions like the inheritance talk, Duignan says, is to work together on some less difficult but important decisions. Here, she gives three examples:

Family giving. “We’ve found this to be a great entry point for financial education,” Duignan says. “Communication here is the key — both parents and their adult children will need to communicate about their desired goals for family giving and then work together to make it happen.” This can include working together on charitable disbursements from a donor-advised fund. Learn more about donor-advised funds.

Estate planning. This isn’t meant to be a discussion of dollars but, instead, a way to talk through potentially uncomfortable topics. A few items to consider:

  • End-of-life care/advanced health care directives
  • Wishes for what happens to assets after death
  • Goals for a family foundation
  • Location of important documents and who is identified for various roles. For more on estate planning, see Wealth transfer essentials.

Investment planning. Duignan says she has seen positive results from families who basically form an investing club with their children. “They might say, ‘Let’s invest $5,000 together,’ and then plan for regular discussions on how to manage that money,” she says. “It can be a great tool for learning and sharing knowledge.”

Ask to be introduced to your parents’ team

“This is something that we hear frequently from younger generations: They wish they could have a formal meeting about finances and be introduced to the advisor, either to talk about their own finances independently or to be part of the conversation with their parents,” Duignan says.

Many times, all it takes for this to happen is to ask to be involved so that the adult children can benefit from formally focusing on their own finances and learning. And sometimes it helps to ask for this introduction early in the financial discussion process. “A lot of times, advisors can help initiate important conversations,” Duignan says, “or know when to bring in tax advisors or attorneys for additional input.”

Plus, once you’ve put in the work to be ready for the inheritance talk, it can be reassuring to know that you have an existing relationship with an advisor who likely helped consult on the plans for the family’s wealth. “Having these relationships, and talking early and often, can help build confidence,” Duignan says. “And that can make the difficult inheritance talk a lot more comfortable.”

Wells Fargo Wealth & Investment Management (WIM) is a division within Wells Fargo & Company. WIM provides financial products and services through various bank and brokerage affiliates of Wells Fargo & Company.

Trust services available through banking and trust affiliates in addition to non-affiliated companies of Wells Fargo Advisors. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.