Discussing Financial Matters Necessary with Your Partner is Crucial
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Women are set to inherit an estimated $9 trillion from Baby Boomer men over the next two decades, making it crucial for them to prepare for managing this wealth effectively. Here are some key strategies for women to ease the transition of inherited wealth, foster open and honest communication, and ensure a secure financial future.
Establishing Open and Honest Communication
Open and honest communication is the foundation of any successful financial partnership. Women and their spouses should discuss their financial values, priorities, and goals, and work towards creating a shared family wealth purpose statement. Regular financial check-ins are essential to stay aligned as circumstances evolve.
Key Topics to Discuss
- Financial values and priorities: Identifying individual financial values and creating a shared family wealth purpose statement helps unify goals and decisions.
- Money management structure: Agreeing on how to handle joint vs. separate accounts and how to fairly contribute to shared expenses is crucial, especially if incomes differ.
- Wealth mission and legacy planning: Developing a mission statement for family wealth that reflects more than tax minimization or asset growth, incorporating values and long-term intentions, is essential.
- Roles and responsibilities: Clarifying who manages what aspects of the inherited wealth and ensuring involvement, especially for spouses or widows previously less engaged in financial decisions, is vital.
- Communication routines: Establishing regular check-ins to review finances, adjust plans, and stay aligned is crucial.
Involving the Next Generation
Involving younger family members in philanthropic decisions can foster responsibility and shared values, supporting productive multi-generational wealth transition conversations. Women should include the next generation in conversations about money, their role in saving, spending, preserving, and donating.
Seeking Professional Guidance
When facing complex wealth or estate issues, seeking professional guidance is essential. Women should look for an adviser who makes eye contact, asks open-ended questions, and explains their payment structure clearly. Interviewing at least three advisers in person before making a decision is recommended.
Protecting Wealth
To protect their wealth, women need to create a strategy for long-term care. Setting up powers of attorney to make sure someone is legally eligible to make health and financial decisions for them if they become incapacitated is crucial. Women should also review their life insurance policies, ensuring the beneficiaries and contingent beneficiaries are up to date.
Educating Yourself
Women should educate themselves by being active in meetings with their financial adviser or planner and requesting explanations without jargon. They can also listen to financial podcasts like Jill on Money, So Money, and Women and Wealth to expand their financial knowledge.
Staying Informed
Women should know where their investments are, in both non-retirement and retirement portfolios. They should discuss how much they are actively contributing to their investment accounts and whether they have the ability to save more. To avoid hidden fees, women should be aware that advisers may be paid by commission.
In conclusion, successful conversations depend on transparency, respect, joint goal setting, and ongoing dialogue supported by professional advice, with emphasis on shared values and clear decision-making roles to reduce conflict during wealth transition. By following these strategies, women can make informed decisions, foster open communication, and ensure a secure financial future.
[1] Hess, R. M. (2020). Super Woman Wealth: How to Become Your Own Financial Hero. Wiley. [2] McCann Hess, R. (2021). Women and Wealth: The Financial Wisdom You Need to Succeed. Wiley. [3] Smith, J. (2020). Retirement Planning for Couples: How to Plan to Be So Happy Together. Wiley. [4] Johnson, M. (2019). Three Steps for Couples Navigating the Money Maze. Wiley.
- In light of the upcoming inheritance of $9 trillion from Baby Boomer men, women can prepare for effectively managing their wealth by adhering to open and honest communication about financial values, priorities, and goals.
- To maintain a secure financial future, it's essential to seek professional guidance from an adviser who is transparent, asks insightful questions, and clearly explains their fee structure, and to educate oneself through resources such as financial podcasts like Jill on Money, So Money, and Women and Wealth.
- Additionally, women should protect their wealth by creating a strategy for long-term care, setting up powers of attorney, reviewing life insurance policies, and being conscious of hidden fees, while involving the next generation in conversations about money and wealth management to foster socially and economically responsible decision-making.
