5 family engagement rules of thumb

See how healthy financial discussions can strengthen family relationships.

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Key takeaways

  • It is common for families to fear that discussions around financial topics, particularly estate planning, will stir up conflict.
  • Properly framing a family money conversation can help families better talk about complex, emotionally laden topics related to Money→Wealth→Estate Planning.
  • Conversational frames help families engage in dialogue to build shared meaning and strengthen relationships, especially during the COVID era.

It is a common fear that financial topics, and particularly estate planning decisions, will stir up family conflict. Sadly, traditional parent-child hierarchies and conventional patterns of secrecy about finances can lead to that. However, when it comes to financial conversations, it is possible not only to avoid conflict, but to promote the growth of mature family relationships.

Like health, financial matters have a comprehensive influence on every aspect of your life. With the added uncertainties of the COVID-19 pandemic still upon us, families tend to avoid these topics or put them off for as long as possible. This tendency to delay can be partly offset by knowing there is a progression of financial topics through the life of your family.

Money→Wealth→Estate Planning is a developmental arena

  • In the early stages, families talk about money: What is it? How do I get it? What does it do for me?
  • Later, conversations move to wealth: Are we wealthy? What does it mean to be wealthy? Whose wealth is it?
  • And then estate planning: Whose wealth is it (again)? Where is the wealth going? Who decides?

Taken together, Money→Wealth→Estate Planning is a developmental arena through which all of life passes. From birth to death, questions and decisions around finances are ever-present, incremental, and increasingly complex through time. There are financial discussions around choosing a career, getting married, having children, buying a home, giving an allowance, deciding who can or will pay for college, making charitable gifts, saving for short-term needs, investing for retirement, planning for long-term care, and envisioning the financial impact you hope to have on future generations.

Each one of these life events provides opportunities for families to learn and grow together. The developmental goal is to break the silence and move beyond parent-child hierarchies to become peers in discussions about these important and sometimes difficult financial topics, through a lifetime of open conversation.

5 rules of thumb for framing conversations

A different way to think about discussions and decisions surrounding family finances is to frame them around a Fidelity Center for Family Engagement (FCFE) rule of thumb.

A rule of thumb is a frame for complex conversations. Rather than defaulting to silence or simplicity, these frames offer a way for your family to engage in reflective and relationship-building conversations. They allow you to co-create outcomes while laying a solid foundation for future conversations around Money→Wealth→Estate Planning.

Here are 5 hypothetical conversational frames, based on real-life scenarios, that can help you foster productive discussion and build strong relationships.

1. Closeness – Distance: Be mindful that every financial decision has the power to create closeness or distance in family relationships. We all recognize what closeness and distance feel like. Close family relationships typically involve open conversations: All views are considered, everyone feels respected and cared for, and there is a sense of fairness. Distant family relationships often involve a lack of communication: Some family members may feel they have no voice, are being judged or controlled, and are treated unfairly.

When it comes to financial conversations, decisions, and actions, ask yourself, “Am I creating closeness or distance in my family's relationships?” This applies to discussions about college, career, lifestyle, and elder care, all of which are examples of developmental opportunities where closeness or distance can be created.

Raymond was a devoted family man who could fix anything, and his children grew up counting on that. When Raymond passed away suddenly, his family was heartbroken. And when his will was read, his daughters experienced a sense of abandonment inconsistent with the feelings they had for him. He always put them first. His daughters could not understand the choices he made for his estate plan. The lack of communication and confusion led to family conflict and eventually ended some relationships.

The story of Raymond's family is not unique. He was a loving father, and his family was close. By excluding his children from financial conversations and decisions, Raymond set in motion a series of unintended consequences that were passed down along with his estate. Despite having good intentions, Raymond’s will did not create the closeness his behavior had generated during his life.

Surprises in a will have significant potential to create distance. By involving your family members in financial conversations and the estate planning process, you can create peership and closeness during your life that carry on across generations.

2. Voice – Vote: Giving a voice and input to others does not mean giving up the vote and final decision on outcomes.

When it comes to navigating Money→Wealth→Estate Planning, it can be difficult for families to determine who should have a voice and who should have a vote, and the default parental practice is generally to keep both.

When Dexter found out his parents appointed him the trustee for his special-needs brother, he understood his obligation but wished he had been given a voice—and maybe even a vote—in the decision.

When Olivia was told how much money she was allowed to spend on her wedding, she felt she should have had a voice. When she was given a prenuptial agreement by her father's attorney, she was confused about who should have voice and vote.

When Arthur learned his parents had created generation-skipping trusts for Arthur’s children—and his oldest son would have access to the money this year—Arthur and his wife felt they lost their voice and vote in a decision that directly affected their own children. But as the legal "grantor" of a generous gift, Arthur’s father insisted they did not need a voice and did not get a vote.

At every developmental stage, parents may fear giving children voice or sharing vote because they assume it means giving up degrees of control. But as children’s roles in the family evolve through time, the Voice-Vote engagement should also evolve.

Giving voice in the Money→Wealth→Estate Planning arena is an important way for you to cultivate peership in your family relationships and step out of traditional parent-child hierarchies. As your children marry and form their own families, and as you age and consider next-generation planning, shared reflections on Voice-Vote dynamics will help you build mature family relationships and facilitate the transition of your decision-making processes.

3. Fair – Equal: Making Money→Wealth→Estate Planning decisions equal does not necessarily make them fair. Siblings do not always have the same lifestyle, capabilities, career choices, health, maturity, marriages, number of children, or life spans. And parents' circumstances and beliefs can change over time. Yet, the more differences there are within a family, the more often parents tend to default to "fair IS equal."

When Luis’s mother sought his approval of her financial support for his brother, which she was not providing for Luis, he did not know how to respond. That turned out to be a good thing, because it gave them an opportunity the hear each other’s thinking and talk through the family's circumstances.

Luis’s mother acknowledged that she had played a role in his brother’s financial dependence on her. She expressed her wish to help the brother bring his financial circumstances more in line with Luis’s. She also shared her hope to work with an advisor to help set future boundaries for the brother. They also discussed the needs of Luis’s own family and what he could expect in the future in terms of wealth transitions.

This scenario illustrates the importance of talking through what is considered fair, because fairness is a matter of personal interpretation. It’s also important to discuss the criteria for measuring fairness: Is it based on need, merit, bringing siblings’ circumstances in line, or trying to treat everyone equally?

Both the process and ultimate decision will impact perceptions of fairness. As a result, avoid declaring what is fair. Involve your children in the conversation and decision-making process so everyone can participate in developing a shared understanding of what is fair.

4. Transparency – Disclosure: One of the most common Money→Wealth→Estate Planning questions is “When is it appropriate to talk about money or disclose wealth and estate plans to children?” But that is only part of the question you should be asking. It’s equally important to explore how you can create an appropriate level of transparency at each stage of life.

Disclosures about wealth and estate plans are often prompted by late-in-life angst, illness, or death. If you delay sharing decisions until they are set in stone, you ensure your children will feel their input has no bearing on the outcome.

Balancing transparency and disclosure encourages you to have developmentally appropriate Money→Wealth→Estate Planning conversations with your children. This creates a sense of shared knowledge and decision-making through time, while still allowing you to hold back certain information until you are comfortable sharing it.

Suyin and Chen both came from families that never discussed money, and late-in-life disclosures influenced their personal finances and family relationships. Late in their lives, Suyin discovered she was to be the sole caretaker and financial decision-maker for her parents, which left her with added stress that her siblings were spared. The decision also created secrecy and jealousy among Suyin and her siblings because she held the financial reins and they felt excluded.

Suyin and Chen were determined not to repeat those outcomes with their own family. They agreed on 2 points. First, they would never refuse to answer financial questions when asked by their children. Second, they would have regular family meetings around key life events such as graduations, college choices, vacations, buying homes, having children, and longer-term financial planning.

Suyin and Chen’s parenting reflects the spirit of this rule of thumb. They did not feel the need to reveal their entire balance sheet or all their future plans, yet their commitment to age-appropriate transparency helped them avoid secrecy and one-time disclosures of decisions made long beforehand.

This frame can help you lay the foundation for setting boundaries around transparency, testing your own thinking, and uncovering potential unintended consequences of your future plans.

5. Wish – Fear: Conversations and decisions surrounding Money→Wealth→Estate Planning are often laden with wishes and fears. We wish for our children to have an easier life than we did, but we fear that any assistance or knowledge of family wealth will destroy their motivation. We wish for our children to have passionate and fulfilling lives, but fear they will choose careers that cannot support the lifestyle we want for them. We wish our parents would be more forthcoming with their retirement and end-of-life plans, but we fear any conversation about the subject.

Wishes and fears are often in tension throughout life. Wishes are aspirational and intimate. They tap into our deepest desires. Wishes are different from goals, which are often measured and based on what is realistic. As the flip side of wishes, fears are reactive and defensive, close our field of vision, and limit the range of action. Most importantly, fears are often self-fulfilling and can erode the quality of family relationships and communications. Unfortunately, financial decisions made on behalf of future generations tend to be motivated primarily by avoiding what we fear, rather than pursuing what we wish.

Robert feared his musician son Charles wouldn't be able to make a living. This fear caused Robert to characterize Charles as incompetent and berate him about financial responsibility. Because his father made him afraid to follow his wishes, Charles reacted rashly in ways that only furthered his father's opinion of him as financially incompetent.

When Oscar’s uncle received his inheritance, he quit his job and never worked again, and his children followed in their father's footsteps. Oscar fears that money will likewise demotivate his own children. To “protect” his family, Oscar lives like a miser, never discusses his personal wealth, refuses to help his children financially in any way, and is considering giving all his money to charity.

It is important to ask yourself “What are my fears?” and “What are my wishes?” to uncover the true motivation behind your behaviors and decisions. Living like Robert or Oscar is a missed opportunity for your family to share in your wishes about the future. Fears also erode the quality of family relationships and communications.

Simply avoiding negative outcomes does not ensure positive ones. When it comes to Money→Wealth→Estate Planning, recognizing your fears will enable you to prevent them from driving your decisions and plans for the future so your wishes can play more of a role.

About the author

Dr. Timothy Habbershon is a managing director of Fidelity Investments. He founded and leads the Fidelity Center for Family Engagement (FCFE), which helps advisors and families build capabilities for how they engage around money, wealth, and estate planning decisions. For more than 25 years, Dr. Habbershon has been an advisor, consultant, and coach to large family-controlled firms and family offices worldwide. He is an Adjunct Professor at Babson College outside Boston. The opinions expressed are those of the author and do not necessarily reflect those of Fidelity Investments.

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