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Managing your money

December 10, 2018

How to talk about money with your family over the holidays

Holiday gatherings are a great chance for families to get together and discuss finances. Here’s how you can do it without dampening the festive mood.

The festive time of year usually means family time, as the holidays tend to bring loved ones together to celebrate over a delicious meal with all the fixings. But after you and your kin tuck into a turkey, it might be time to actually talk turkey about your family’s finances.

“Talking about money can feel as uncomfortable and taboo as having the birds-and-the-bees talk,” says Layne Choong, a Sun Life Financial advisor in Calgary. “But given that money is one of the leading causes of stress, it’s vital for families to have a strong understanding of their overall finances, so they can avoid any future pitfalls.” 

If you’re thinking of having the money talk with your family this season, here’s how you can get the conversation started and why you need to discuss it sooner rather than later.

Why talk about money over the holidays?

“Everyone talks about spending a little too much over the holidays and that’s understandable,” Choong says. “But a lot of people also have financial questions that they’ve been thinking about all year or even for several years.” 

Perhaps you’re planning to buy a new life insurance policy to help secure your family’s future. Or maybe you want your children to know what you plan to do with your estate, now that you’re retired. “Wills, retirement plans, insurance, etc. These are money matters that families don’t talk about enough or sometimes at all, but they should,” Choong remarks.

“I’ve seen many situations where families of a deceased person are left scrambling to figure out where their assets are and how to handle everything because they never discussed their finances,” Choong adds. “It’s stressful, time consuming and costly for your loved ones.”

Talking about money might be tough at first, but afterwards, you’ll feel much more at ease knowing what to do and where to turn in case anything happens to you or your family. “With everyone gathered under the same roof, the holidays provide a great opportunity for families to have an honest discussion about any financial questions or concerns they may have,” says Choong.

But bringing up such serious topics during a jovial holiday bash might ruin the mood. So, how do you approach the subject without being a buzzkill? Choong suggests putting together a schedule of all your holiday events and then setting aside a separate time to talk about financial planning. Whether your relatives are flying in from the other side of the country or driving in from the other side of town, it’s a good idea to book some time with them.

“You don’t want to bring it up over a holiday meal or party, since that’s a time for celebration,” she says. “Personally, I believe it’s best to hold off until a day or two after all the festivities have come to an end. At that point, the party is usually over and everyone’s a little more clear-headed and willing to hear you out.”

What financial planning questions do you need to consider?

Before you pencil in time for the discussion, put together an outline of everything you want to talk about and make sure everyone’s on the same page as to what financial matters should be discussed. “This way they’re less likely to get upset over anything that comes up,” says Choong.  

Depending on your family’s current financial condition, various subjects could come up – budgets, loans, insurance – but if you have children or elderly parents, Choong suggests starting with these questions:

Do you or your parents have a will? “If you die intestate – meaning without a will – the law decides who will be the administrator of your estate and how your assets will be divided,” says Choong. This means your estate may not be distributed the way you want. For instance, valuables and investments you had intended to pass on to your partner or kids might end up elsewhere.

Going through legal channels to sort out who gets your assets after you die can also take several years, depending on the circumstances. “It’s not a great situation to be in or to leave your family in,” she says. “You can avoid these complications by writing a will.”  

Do you have an executor for your estate? An executor is someone who carries out the terms of your will after your death. “People sometimes name a loved one or a close friend as their executor,” Choong says. “That’s fine, but all parties need to know what they’re getting into and how much work is involved with the role.”   

Executors must complete dozens of administrative tasks like reviewing insurance coverage, investigating and paying debts, taxes and fees and distributing assets to beneficiaries. “In some cases, being an executor can be like having another full-time job,” Choong says. “It’s a huge ask for a family member or someone close to you.”  

If the person you’ve asked to be your executor turns down your request, you can hire a legal professional to do the job. “Some attorneys have legal and accounting backgrounds and their focus is solely on being an executor.”  

Are there any beneficiaries in place? Name a beneficiary – the person you want to leave your money to – on any financial product that allows it. Why? It’s a huge stressbuster for your family because:

  • You don’t need to hire a lawyer to do it.
  • Your financial institution deals with the paperwork.
  • Your beneficiaries won’t have to wait for your estate to be settled to receive the money.

A couple of examples: If you have an RRSP, by naming your spouse or common-law partner your beneficiary, the value of your RRSP can be rolled into your spouse’s RRSP. If your money is in a RRIF or a TFSA, you can name your spouse as successor annuitant (RRIF) or successor plan holder (TFSA).

“And, if you’ve named a beneficiary in your life insurance policy, then the death benefit can bypass the estate, which has to pay off debts and taxes before paying your family,” Choong explains. “This way your loved ones will have faster, easier access to your financial proceeds.”

You can often name multiple beneficiaries and assign a percentage value on how much each person will receive.

How to get the conversation started

“Money is a sensitive subject, but talking about it doesn’t have to be crass,” Choong says. “Politely tell your family why you want this conversation. Let your relatives know that you want them to be in the loop in case anything happens.”

The unexpected can happen at any time to any one, regardless of their age or health. If someone you love dies, you don’t want to stress about their estate or finances while you’re in mourning. “It’s really a matter of hoping for the best and preparing for the unforeseen.”

Another way to minimize the discomfort is to generalize the conversation. “Your family members may be uncomfortable disclosing exact dollar amounts that are in their investments or their wills,” she says. “So, don’t mention it. Instead, put the focus on the types of accounts and insurance policies you all have, where they are and who your financial contacts are. This could be your advisor, executor or lawyer.”

What if your family needs help talking about money?

Feeling uncomfortable or uncertain about where the conversation is headed? It could be beneficial for everyone involved to see an advisor together. “An advisor can be a great mediator who can walk you through all your financial options, check off everything that needs to be addressed and help you figure out a plan that’s right for your family,” Choong says.  

Some families have one advisor with whom they check in annually. “It’s great when family members have one trusted advisor they can turn to, because he or she will have a greater understanding of that family’s situation and will be in a better place to give them advice,” says Choong.

Of course, it isn’t always feasible for everyone to have the same advisor. Your financial situation could be vastly different from that of your parents or siblings. Or, maybe you don’t live in the same city or province as the rest of your family. “It’s okay if everyone has their own advisors,” Choong says. “With your permission, an advisor can keep your family up to date on your plan, without revealing exact dollar amounts or anything too specific.” This makes it easier for people who have trouble explaining or talking about finances with their immediate family members.

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