Here is an article by Dr Richard Orlando - founder and CEO of the independent firm Legacy Capitals and author of LEGACY: The Hidden Keys to Optimizing Your Family Wealth Decisions - about the issues families experience when thinking about bringing up a conversation about wealth.

I am often asked by my client-families, “When should I begin talking about our family’s wealth with our children?” My response: “You have already begun to communicate about your family wealth by the lifestyle decisions you have made thus far, the implicit and explicit comments (or lack thereof) in the family conversation about money in general, and the actions you take (e.g., giving back).” It is very important to remember that most of the communication that takes place between people, family members in particular, is non-verbal.

Everyone acknowledges the importance of effective communication. And it is crucial. Yet in my experience, wealth holders rarely avoid talking to the next generation about their finances because they lack communication skills; in reality, they fear the implications of others knowing about their wealth, such as their children developing affluenza or being taken advantage of. Additionally, some believe that one is not supposed to talk about money, or that to do so is crass.  

However you personally feel about having money conversations within your family, remember that two-way communication is crucial to the next-generation’s preparation of handling it in the future. Here are a few guidelines that can be used to prepare your family to talk about money [and may be of use to advisors serving wealthy families].

Don’t talk about the money. I have found that the number one stumbling block to communication is that wealth-holding parents assume they have to talk about their actual financial statements. You don’t have to talk about the actual money—the dollars and cents of things—for some time. There is a lot to talk about before you get to the financial statement, including the responsibilities, opportunities, and expectations that come with wealth.

Get clear on your legacy message. For parents, communicating about the family’s wealth to the next generation is more about getting the message right. The “message” refers to the shared values, purpose, and expectations of the family. Focusing on this message is important, whether a conversation takes place within a family-of-origin, with a spouse, significant other, extended family member, or friend.

Move toward transparency. I don’t want to promote keeping secrets or denying facts; however, this progression doesn’t have to mean full financial transparency all at once. For example:

1.    Personal financial education can begin at a very young age with the help of age-appropriate methods and tools such as piggy banks, allowances, and budgets. For tweens and teens, introduce them to the topics of saving, spending, investing, and giving back. Or, for young adults, begin to educate them on topics such as compounding interest, credit, and saving for retirement.
2.    If your estate plan requires or is designed to “transfer” or make money available to your children at, let’s say, 21 years old, then this upcoming change could be a great opportunity to talk about the respective assets that will be made available to them when they reach that age.
3.    As children get closer to marriage, this life change is another opportunity to talk about the portion of the family wealth that may have an impact on them so that they can factor this change into their family planning. In some families, a prenup is required, and all too often, the creation of this document is the first time money is talked about or disclosure required. I do not recommend a prenup being the first time the family wealth is discussed.
4.    Another step toward transparency is to share a macro picture of the family’s assets, the legal structures around the assets (e.g., LLC, Investments, Foundation, etc.), and the professionals (family office, CPAs, attorneys, trustees, wealth managers) responsible for guiding the family’s assets, without talking to the specific values (e.g., 10 million in liquid assets) of each of the assets.
5.    Some of the families I have served decided to reveal every detail of the family’s wealth once their children had graduated from school, were established in their careers, and had children of their own.

However you decide to manage the amount of information about your assets you share with your family or the time that you do so, the most important thing is that you do oversee this process the way you would manage your assets themselves. Consider not just your family’s present situation, but its future, and how the degree of transparency between you and your family and the information being conveyed will affect your family’s legacy in the years to come.