How to Talk to Adult Kids About Money and Inheritances

How to Talk to Adult Kids About Money and Inheritances
Elliott Appel, CFP®, CLU®, RLP®

Elliott Appel, CFP®, CLU®, RLP®

Welcome! I'm Elliott, the founder of Kindness Financial Planning, LLC, a fee-only, fiduciary advisor located in Madison, WI working virtually with widows and caregivers across the United States. When I'm not helping people live their ideal life, I'm often cooking for my wife, playing tennis, or hiking.

Last Updated on January 24, 2023

I’ve heard and seen many families make mistakes about inheritances, estate plans, and talking about money. 

Unfortunately, money is a taboo topic in most families. 

Parents might say, “We are doing fine.” They might also say, “Yes, we prepared for long-term care”, without actually understanding what it means to be prepared. 

Adult kids are thinking about their parents’ finances. I know because I speak with them regularly. 

What if you could provide more peace of mind, be open about money, and discuss what you have written in your estate plan and whether that includes an inheritance? 

How would that make you and your adult kids feel? 

Let’s talk openly about money today and how to prepare your adult kids for an inheritance. 

Why It’s Important to Talk to Adult Kids About Money

First, it’s important to talk to your adult kids about money sooner rather than later because life happens

One day you are fine. Next, you aren’t. 

You may have thought you had decades, or at least years, to see how your adult kid turns out and how you want to structure your estate plan, but you may not get that chance. 

Money conversations should be an open dialogue. It’s important to come back to them regularly as life changes. 

Why It’s Important for You

Reason #1: They are already thinking about it

It’s important for you to talk to your adult kids about money because they are already thinking about it. 

Trust me, even if you have never talked about money or have only talked about certain aspects of your financial life, your kids are wondering whether you will be okay. They may even wonder what they need to do if you died or became incapacitated. 

You can put their minds at ease. What a gift that would be – for both of you. 

Reason #2: Questions can be answered

If your adult kids have concerns, questions, or something is unclear about how you want your estate divided, they can ask now. 

You can’t ask questions of a dead person and get a response. 

I’ve frequently seen ambiguity in estate planning documents, such as a trust or Will. What if you could address those questions, or better yet, rewrite them with more clarity before you died? 

A few questions can go a long way in removing the uncertainty about how certain legal language should be interpreted in a trust or Will. 

Also, your adult kids may bring up questions or scenarios you haven’t considered. What if one of your adult children plans to have more kids? What if one family may want to move across the country? What if one grandchild may need more care because they have special needs? 

Trying to factor in the needs of two people in an estate plan is hard enough. Layer in multiple families and their needs and feelings about how a person’s financial life should be divided is even more challenging. 

It can cause confusion. 

Having conversations about money before death gives everyone an opportunity to ask questions, play out the scenarios in the Will, and understand what should happen. 

Reason #3: Conflicts are better when alive

When someone dies, grief shows up. Paperwork shows up. Family dynamics come out – for better or for worse. 

To the extent you can reduce or eliminate conflict, would you want to?

I know many families are afraid of introducing conflict by mentioning how they plan to leave assets at death, but rarely do conflicts get better after death when you are not there to help. 

If there is going to be a conflict or hard feelings, it’s often better to address it while you still can. 

Reason #4: You may want to accelerate gifting 

If you’ve reached a point where you feel confident you’ll have more money than you can spend in your life, perhaps instead of a large inheritance, you may want to gift that money sooner. 

What if you could allow your adult kid to spend more time with their own children, work less at a soul-crushing job, or spend more time with you as you age? 

Thankfully, more families I talk with recognize the value of receiving money in their 40s or 50s instead of their 60s or 70s. They determine gifting money while still alive may have more of an impact than a large lump sum amount at death. 

Plus, they may get to see how the money is spent and enjoy the memories it creates. 

Why It’s Important for Them

Reason #1: Honor your wishes

Most adult kids want to honor your wishes.

The problem is that they may not know your wishes! 

You may think because you talk about something frequently that they understand how that may translate into dividing assets, preparing a funeral, or what medical decisions you want and how that may affect your finances, but there is a good chance they don’t. 

If you tell your adult kids exactly what you want done, they can be more at ease knowing what to do if something happens to you. They can write down what you tell them or ask questions about what you have written down. 

Values are important for families. How it shows up in your money and inheritances is also important. Your adult kids have no way of honoring those values if it isn’t explicitly discussed. 

Reason #2: They can plan their lives

No inheritance is ever guaranteed. 

You may need long-term care for years. The stock market may have a prolonged decline. You may spend more than anticipated. 

While the final inheritance may not look like what it is today, it doesn’t mean the numbers and initial plan can’t help your adult kids make better decisions about their own life. 

If you think you may run out of money during a long-term care event, your adult kid may want to know that to figure out how they could help support you or what it means to move closer to you. 

If you are leaving each adult kid $1,000,000 at death, they may scale back at work and find something more meaningful. They may also want to spend more time with family. 

Although every plan can be thrown off course, knowing the possible outcomes is helpful. 

Uprooting a family’s life because they need to be closer to a parent is not an enjoyable surprise. A major inheritance is a nice surprise, but more planning and preparation for an inheritance may help an adult kid plan their life. 

Reason #3: An inheritance could mean meaningful life changes

I’ve heard of people blowing through large inheritances only to become broke. I’ve heard of people wishing they had known they could get a large inheritance so they could have spent more time with family rather than working. I’ve heard of people feeling guilty about inheritances and wanting to give it away. 

An inheritance, or any sudden large sum of money, can change life. 

Not knowing it is coming can cause a rainbow of emotions. 

I know there are people who worry about adult kids becoming lazy because they know they will get an inheritance, but I think most people want to work, be connected with society, and find purpose in their work. 

What if your adult kids could prepare for an inheritance with the expectation that it could go away at any point, but start to prepare for what life may look like with it? 

Having the conversation early could also influence you to give more while alive to see how they handle the money. 

How to Bring Up the Conversation

Now that you know why it’s important to talk about money and inheritances with your adult kids, let’s talk about how to bring up the conversation.

It can be awkward, right?

You don’t want to sit down one day and say, “Let’s talk about what happens with my money when I die.” 

Most families aren’t going to want to entertain that conversation. 

Idea #1: Mention your financial planner, forum, or other online learning

For example, you could say, “I met with my financial planner the other day, and they thought it would be good to bring up our estate plan with you. They’ve seen the positive outcomes when families talk about money and expressing wishes.” 

By framing it that way, you’ve shifted the responsibility onto the person who suggested bringing it up – a more neutral third party. I love when clients tell their family, “Elliott said to consider this…”

It usually invites a more open conversation. Why did they make that recommendation? What does it mean for me? A more neutral third party can be an effective person to invite the conversation and potentially take the blame if the conversation doesn’t go well. 

Idea #2: I saw an article about…

You could say, “I read an article the other day about how a parent died, and their adult kids felt like their parents left them a huge burden and many unanswered questions. I don’t want you to feel like I am leaving you a burden and want to give you the opportunity to ask questions. Let’s set up a time to talk about my Will.”

Draw from the experiences of others. 

I’m vocal about my experiences caring for my dad to help others be more prepared in the event they need to be a caregiver, ask better questions, and potentially avoid mistakes I’ve already made. 

Whether you need to talk about an estate plan, taxes, or burial wishes, you can bring it up by saying you read an article about it. 

Idea #3: I’ve personally experienced a hard time when my parents died

I talk with many people who express the frustration they went through when their parents died. 

Beneficiaries weren’t correct. They didn’t have a Will or power of attorney. They didn’t outline what sort of services they wanted. 

The list is long of actions people wish their parents would have taken prior to death to make it easier on them. 

If you or your friends have had trouble when parents died, tell your adult kids about that experience. You could say, “I don’t want you to go through what we experienced. We spent months trying to track down assets, get access to accounts, and spent a lot of money we shouldn’t have needed to spend. I don’t want you to go through that, so let’s talk about what to do if something happened to us.”

If you approach it from a place of saving them time, money, and heartache, they may be more receptive to listening. 

How to Hold the Family Meeting

The family meeting doesn’t need to be boring or uncomfortable! 

Plan an enjoyable activity around it. Here are a few ideas:

  • Dinner
  • Picnic
  • Board games
  • Cooking class
  • Puzzle
  • Crafts (painting, drawing, etc.)
  • Beverage tasting (wine, beer, mocktails)

You could incorporate the activity into the discussion. Sometimes, when people have something else to focus on, they can participate better. For example, you could do a puzzle or paint at the same time you have a conversation. It gives the people not actively talking a chance to do something else. 

If you feel that won’t work for your family, consider doing the activity after the conversation as something to look forward to. 

When starting the family meeting, set the tone of the meeting and why it’s important to you. You could say something like, “I know this isn’t an easy topic to discuss, but we want to make sure you know our values, wishes, and why we designed our plan this way. We encourage questions. We want you to know why we are splitting assets and what you may need to do as a beneficiary or executor. We’ve heard many horror stories, and we want things to be as easy as possible for you. This is the first of what may be ongoing conversations as life changes for us and you.”

If it’s the first time discussing the topic, consider not getting right into the numbers. Generally, I like people to talk through their estate plan: who fills what role, what is required of that role, charitable gifting that may take place before distributions to family, and the plan for long-term care. 

Once people get an idea of the framework, what happens when you die, and everything else, then you could consider approaching the numbers. 

Let’s talk about the major topics you’ll want to discuss. 

Executor and Power of Attorney Roles

Although this is a conversation about money, one of the most important conversations is who will fill the role of executor and power of attorney (financial and healthcare). 

They are the ones who will have to make decisions when you can’t. 

You need to know that they understand what is written in the documents and how to honor your values. 

If you named two people as co-power of attorneys, they should know whether they can act independently or need to make unanimous decisions. 

People should also know the order of succession if one person is unwilling or unable to serve as power of attorney. How many other people could take the place? What happens if none can? Have you named a corporate trustee or a fiduciary to step into the roles?

Being an executor and power of attorney are thankless roles. Your adult kids should have an idea of the time required and whether they will earn compensation for taking the role. 

End of Life Care

Ideally, you have already written down what you want with end of life care and various scenarios.

If you haven’t, consider doing it before the meeting. 

It’s really helpful to have a document that says, “I don’t want nutrition or hydration provided in XYZ circumstances because…” 

If someone does not have a medical background, they may wonder why you don’t want nutrition or hydration if you are ill and unable to make your own decisions. They may also be uncertain under what conditions you want it. 

Consider discussing a few different scenarios, such as:

  • Unlikely to survive more than a month
  • Likely to survive, but with severe limitations and much lower quality of life
  • What sort of medications or treatments you want with various illnesses

If you need more scenarios, I recommend checking out End of Life Washington’s Advance Directive

They have many different scenarios you could discuss with your family. 

By making it known what you want, you remove the uncertainty your family may feel deciding for you. 

Should I Share Actual Numbers?

One of the common questions people ask is, “How much financial information should I share with my family? Should I share the actual numbers of how much is in each account?” 

Personally, I like when families share actual numbers. 

There is a big difference between, “We will be fine and saved well.” and “We have $1,000,000 in a brokerage account, $2,000,000 in an IRA, and $200,000 in a Roth IRA to support our lifestyle.” 

The same can be said for “We will be fine and saved well” and “We only have $100,000 to support our retirement.” 

People have different interpretations of what is needed for a successful retirement. Why not talk about it? 

There will be family members who can’t handle knowing the real numbers, who may get lazy if they know they will get an inheritance, but I believe more people are capable of being told the numbers and handling it well. 

The key is to make them understand the numbers are not set in stone, various things could happen to lower the numbers (lower stock market returns, long-term care needs, etc.), and that they can use it as a starting point in their own planning. 

If it’s extremely likely they will get an inheritance or you will do more gifting before you die, why not tell them ranges of the amount? 

It may mean more flexibility in their life. 

It also gives you an opportunity to tell them why inheritance amounts may be unequal. For example, if you helped one child with an expensive wedding, a down payment, or sold a business to them for a discount, perhaps you have an uneven distribution in your Will as an inheritance.

You may want to discuss it and how the amounts could change over time and what that means for them. 

It gives them the opportunity to ask questions while you are still here. 

Family Heirlooms and Prized Possessions

If you have jewelry, instruments, firearms, bicycles, cars, or any other family heirlooms or prized possessions, please consider writing down what goes to each person.

You can also ask what people want. 

Perhaps your beautiful necklace that you wanted a daughter to get has no interest in it and another daughter or daughter-in-law wants it instead. 

It’s good to figure out that stuff before you die. 

I’ve heard plenty of stories of people fighting after someone dies about who gets what – sometimes for very inexpensive, yet sentimental items. 

Once you discuss with everyone, don’t forget to write it down on the supplemental sheet your attorney may have given to you specifying who should get specific items. 

Introduce to Professional Team

Lastly, consider introducing your adult kids to your professional team, such as your financial planner, accountant, and attorney. 

When I’ve been introduced to family members in advance of someone becoming incapacitated or dying, the transition is much smoother. 

Adult kids get a chance to know the important professionals in your life, how they have impacted you, who to turn to settle your estate, how to make distributions, how it will affect your taxes after death, and more. 

If your adult kids know who to call, it will make it easier for them when they are trying to navigate the healthcare system or the endless list of things to do after you die

Common Mistakes: Trusts and Other Considerations

Over the years, I’ve noticed a few mistakes people make when talking about money and inheritances with adult kids. 


If you plan for a trust to spring to life upon your death for your adult kid, please make sure you understand the terms of the trust and convey what it means for your adult kid. 

I often meet people who are unaware of how a trust is taxed (trust tax rates are higher!), when distributions should be made from the trust (it’s important to read the trust document!), a tax filing may be required for the trust, and the potential benefits of a trust (creditor protection, privacy, divorce protection, etc.). 

Please make your adult kids know what is required of them if they will be the beneficiary or trustee of an irrevocable trust. 

Charitable Gifting

If you give to a charity or leave a specific amount to charities in your Will, consider telling your adult children why it’s important to you.   

This is an easy way to open the conversation about money because it’s more about values. 

If you plan to leave significant gifts when you die, your adult children may wonder why you did not leave that to them. That may be an honest conversation you wish to have before you die. 

I’ve heard stories of people being confused about why certain amounts were left to charities.

The Order of Inheritances

I’ve seen many people leave specific amounts to a charity or person, such as, “I leave $50,000 to XYZ Charity.”

It’s great people are providing a specific amount, but I’ve also seen Wills that are unclear what happens if there is not enough money for all the gifts. 

For example, if someone names five people and five charities to each receive $100,000, but the person doesn’t have $1,000,000 when they die, what happens? 

Your Will should address it, but I’ve seen Wills that don’t. 

I recommend people go through their Will with their adult children to ask these “what if” questions. What if this person dies first, what happens to their share? What if you die with XYZ amount, how is that split? What if you only have enough for charitable gifts, does that take precedence over the amount to the family? 

Go through the scenarios and play them out. Does everybody understand what happens and is the Will clear about it? 

Taxes of Inherited Assets

Another mistake I often see is heirs unaware of how the assets are taxed that they receive. 

Do your adult kids know about the 10 year rule for Inherited IRAs? Do they know about a potential step up in the cost basis for brokerage assets? Do they know if your estate will owe a state or federal estate tax before assets are distributed? Are they aware of states that impose an inheritance tax

Have you done planning to help make sure the most money passes to them after taxes?

While you are alive, I’d recommend going through your different accounts and explaining what happens to them, how they are taxed as an heir, and what passes through probate versus a beneficiary designation. 

Final Thoughts – My Question for You

Although many people think bringing up money and talking about it with adult children will create issues, it is unlikely. 

If there are issues, they were likely already there. 

Those issues won’t get better after you die. It’s likely better if you can ask questions, explain what happens with your money, and why while alive. 

Take the time to bring up the conversation and hold a family meeting about money and inheritances. Consider sharing actual numbers of what someone may inherit, how you want assets split, and go into detail about what to expect if they inherit certain assets. 

I’ll leave you with one question to act on. 

When will you talk with your adult kids about money and inheritances? 

Disclaimer: This article is for general information and educational purposes only and should not be considered investment, financial, legal, or tax advice. It is not a recommendation for purchase or sale of any security or investment advisory services. Please consult your own legal, financial, and other professionals to determine what may be appropriate for you. Opinions expressed are as of the date of publication, and such opinions are subject to change. Click for full disclaimer.

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email

Educational and Thoughtful
Content to Your Inbox

More To Explore

How to Use Your HSA in Retirement

How to Use Your HSA in Retirement

Health savings accounts (HSAs) are not only a powerful planning tool to pay for qualified medical expenses, you can also use your HSA in retirement.