10 Things Your Parents Won't Tell You
Good news: Mom and Dad are loaded. Bad news: They love your brother best.
By KELLI B. GRANT
SmartMoney
1) "We're rich."
Andrew and Warren K. Johnson knew their dad Warren W. collected coins, but it wasn't until after he passed away in April that they discovered the full scope of his hobby. Stored away in boxes on shelves in his Grosse Ile, Mich., home's basement was a sprawling coin collection, including hundreds of Morgan and Peace silver dollars, each of which is worth about $30 for the silver content alone but can fetch upwards of $100 for rare types and those in great condition. "It was jaw dropping," says Andrew Johnson, who has the coins in a safe-deposit box for now. "We wouldn't be able to retire on it, but it would make a nice inheritance."
Surprise inheritances aren't uncommon. In a recent U.S. Trust study, 52% of parents with assets of $3 million or more said they haven't told their children just how wealthy they are, and another 15% haven't even said told them that they're well off. Why are they withholding? Most parents think they have plenty of time to talk about money later, and don't want the knowledge of wealth to be a burden, says Joseph Falanga, the president of the National Association of Estate Planners & Councils. There's also the fear that kids might become lazy or make bad choices in anticipation of a windfall. But not talking about inheritance comes with its own pitfalls, says Myra Salzer, founder of The Wealth Conservancy, which helps heirs manage their finances. For example, she said one of her clients invested a $250,000 inheritance rather than pursue his dream of becoming a racecar driver -- not realizing his parents had also left him a multi-million dollar trust that would come a few years later. By then, he was too old be a driver, she says.
2) "You're not in the will."
There's another big reason so many parents haven't talked about their net worth with their kids: They aren't planning to give any of it to them. The U.S. Trust study on wealth disclosure also found that 49% of respondents don't think it's important to leave a financial inheritance. Instead, many parents are planning to give their money to charity. Parents who are angry with a child might cut kid completely out of their wills, or subject him to a long list of criteria in order to claim his share, says Marilyn Capelli-Dimitroff, a certified financial planner based in Bloomfield Hills, Mich. You might need to wait until you're 60, for example, or keep working in order to get your payout. Children may also be cut out inadvertently, says certified financial planner Lynn Ballou, a managing partner at Ballou Plum Wealth Advisors in Lafayette, Calif. For example, if a divorced or widowed parent remarries, his or her assets automatically go to the surviving spouse unless a trust had been set up for the children.
(More here.)
By KELLI B. GRANT
SmartMoney
1) "We're rich."
Andrew and Warren K. Johnson knew their dad Warren W. collected coins, but it wasn't until after he passed away in April that they discovered the full scope of his hobby. Stored away in boxes on shelves in his Grosse Ile, Mich., home's basement was a sprawling coin collection, including hundreds of Morgan and Peace silver dollars, each of which is worth about $30 for the silver content alone but can fetch upwards of $100 for rare types and those in great condition. "It was jaw dropping," says Andrew Johnson, who has the coins in a safe-deposit box for now. "We wouldn't be able to retire on it, but it would make a nice inheritance."
Surprise inheritances aren't uncommon. In a recent U.S. Trust study, 52% of parents with assets of $3 million or more said they haven't told their children just how wealthy they are, and another 15% haven't even said told them that they're well off. Why are they withholding? Most parents think they have plenty of time to talk about money later, and don't want the knowledge of wealth to be a burden, says Joseph Falanga, the president of the National Association of Estate Planners & Councils. There's also the fear that kids might become lazy or make bad choices in anticipation of a windfall. But not talking about inheritance comes with its own pitfalls, says Myra Salzer, founder of The Wealth Conservancy, which helps heirs manage their finances. For example, she said one of her clients invested a $250,000 inheritance rather than pursue his dream of becoming a racecar driver -- not realizing his parents had also left him a multi-million dollar trust that would come a few years later. By then, he was too old be a driver, she says.
2) "You're not in the will."
There's another big reason so many parents haven't talked about their net worth with their kids: They aren't planning to give any of it to them. The U.S. Trust study on wealth disclosure also found that 49% of respondents don't think it's important to leave a financial inheritance. Instead, many parents are planning to give their money to charity. Parents who are angry with a child might cut kid completely out of their wills, or subject him to a long list of criteria in order to claim his share, says Marilyn Capelli-Dimitroff, a certified financial planner based in Bloomfield Hills, Mich. You might need to wait until you're 60, for example, or keep working in order to get your payout. Children may also be cut out inadvertently, says certified financial planner Lynn Ballou, a managing partner at Ballou Plum Wealth Advisors in Lafayette, Calif. For example, if a divorced or widowed parent remarries, his or her assets automatically go to the surviving spouse unless a trust had been set up for the children.
(More here.)
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