How To Share Your Financial Data With Family

It’s understandable if you hesitate to share personal financial data with your family. Money is a very private affair. It can also alter the family dynamics and impact other family members negatively. It brings up a lot and there are tremendous stakes in the balance. I get it.

But with all that said, I still encourage you to open your books to your family and here’s why I feel this way. First, you never know when someone else, like your spouse or even a trusted sibling, may have to step in to fill in if you are incapacitated. (Baseball teams always have players warming up, shouldn’t you?) And by including other family members in your circle of financial trust, you provide them the rare opportunity to learn first-hand.

So while the risks are there, sharing your financial facts is well worth it if done right. Here’s how that’s done.

1. What To Share

First, decide what material you are going to share. Remember that your purpose is to bring others up to speed in case they need to take over the reins and, at the same time, to teach them skills they can use in their own financial management. With that in mind, I suggest you share information on your:

• Spending
• Income
• Assets
• Liabilities
• Life and Health Insurance
• Estate Planning Documents

In short, if you are going to achieve your goals, the people you share with have to have all the information. If you hold back important information, you defeat the purpose amigo.

2. What Not To Share

To achieve your goals, you don’t have to spill the beans on how you plan on splitting up your assets between the family. Having said that, if you are not going to split the money up equally, this might be a good time to explain why rather than let the kids discover this later on. I’ll leave that decision up to you.

3. With Whom

You don’t have to share all your financial secrets with everyone. Think about who you want to act as your pinch hitter should you end up on the disabled list. If you are dealing with adult children, I would actually share the information with all of them unless there was a compelling reason not to. The last thing you want is for some children to feel you didn’t trust them. Again, there are plenty of extenuating circumstances when full disclosure is not a good idea. Use your discretion but don’t use this as an excuse. You have to find at least one other person to share your information with.

4. How To Share

Once you’ve decided who you are going to speak with prepare a password protected document that summarizes your situation and (most important) where the information is stored. Hopefully they won’t have to access your data for many years to come but you want to leave them a map of where to find your treasure should the need arise.

Sit down and explain what you want to do and why. But before you dive in, ask them if it’s OK with them. Remember, by sharing all this information you are asking them to take on a big responsibility later on. Just because you want them on your team doesn’t mean they are ready to sign on.

Go through all of your information and make sure to answer their questions. Explain how often you update your information, how you do it and where you store it. Then, ask if it would be OK to meet every several years to go through the information again and to refresh their memory.

Sharing financial information is a vital process but it’s an emotional enterprise as well because it makes you vulnerable. Choose who you share with carefully, prepare your information and then proceed once the other party agrees to be brought in.

Have you shared your private financial information with others? Are you glad you did so? What were the consequences?