Shhh. . . It’s a Secret

When should I tell my teenager about the money?

Parents worry about family wealth issues, but advisors seldom welcome those tough, personal conversations.  It isn’t about the form of trust document; it’s about how wealth will affect their family, especially the children.  Will the  plan be encouraging weak, dependent behavior? Can you help them think through these issues?  If you do, you will have a much deeper relationship you’ll both benefit.

Oh, dear—we have some questions about this question.  One question is what do you mean by “about the money?”  Is it that your family is unusually wealthy and you think you’ve kept that a secret (by not “telling”?)  If your child is already a teenager, we think it’s quite likely that she’s already gotten information, and formed opinions, about the family wealth.  We’re long past the age of controlling information.

If so, all that the secrecy has accomplished is to let the child fill in the information gaps, with talk by other kids, grown-ups or the media.  Although wealth is always relative, by the time a child is a teenager, she’s figured out whether her family seems to be “wealthy” or not.  One mother in a wealthy family gives very succinct advice to her friends: “You can ignore the issue, and other people will give the information to your child, or you can control the information by telling them yourself what you want them to know.”

Why the Secrecy?

Another question is why has this information been kept a secret (in theory)?  The child is likely to pick up quickly on the parents’ feeling of embarrassment about their wealth.  Topics that aren’t allowed to be discussed quickly become the “elephant” in the room.  This ambiguity often continues from generation to generation.

We often say it’s like giving a teenager a car—but without any driving lessons.

No One Right Answer

Why do parents assume there’s one right answer and one magic age when they ask, “At what age should we tell them?”  This supposes that at the magic age, they’ll tell the child, and the subject will be all taken care of.  We wonder if this is like having a talk about the birds and the bees.  Unfortunately, this approach is quite common.  We know about one 3-generation gathering at which the 40-year-old daughter asked her mother, “When were you told about the money?”  The mother had an immediate answer: “When I was 50.”  Often, it’s the age when a trust distribution will be made (typically at age 21 or 25) when a child is first told about “the money.”  When it comes as sudden information, with no background context, the surprise is usually unsettling.  We often say it’s like giving a teenager a car—but without any driving lessons.  A better image is the toddler learning how to ride a bike by starting with training wheels.  In other words, this discussion should be a process, continuing during many (all?) ages.

Elephant-in-the-Room-262x300We’ve learned that family wealth needs to be treated just like all other topics.  Children ask questions; parents give answers.  Children learn about the world and their place in it.  When the family wealth is a forbidden topic, it grows in importance (no accident that forbidden subjects are compared to very big elephants) and causes emotional confusion.  The key is to listen carefully to figure out the real question.  It’s not likely to be a request for a balance sheet.  It’s more likely related to something very specific that has come up in the child’s life.  A good answer can always start with: “And why are you asking?”

A Non-Answer?

Finally, what if the parent just doesn’t want to answer those questions?  Does this shut the (closet) door?  We see even this as a way to begin a wealth discussion, from a different point of view.  It doesn’t always need to be a concrete answer.  We have actually found that it’s nearly as good as a substantive answer (and probably better in some ways) for the parent to answer by explaining why she doesn’t want to answer those questions.  This is a great opportunity to start conversations about attitudes toward wealth.  Talking about it makes it a normal safe subject.  One fewer elephant in the closet.