The key to successful intergenerational financial planning lies in financial education and open communication within the family. Parents, grandparents and children should talk about money and pass on financial literacy. This includes planning your own retirement including care costs as well as playful financial education for the next generations.
Financial planning covers the entire life cycle of a person: from childhood and education through employment and starting a family to retirement and retirement planning. Each phase presents unique financial challenges that require careful planning. Do you think you can do your planning once and then tick off the topic? Not even close!
The economist Claudia Müller has been leading the Female Finance Forum she founded since 2017, which educates women on how to handle money and make sustainable investments. Before that, she studied international economics and worked, among other things, at the Deutsche Bundesbank, where she was responsible for green finance. She applied this knowledge in parallel to founding the Female Finance Forum in a single family office, where she was responsible for sustainable liquid investments.
Set up the ETF savings plan for your children or grandchildren. But also remember: Your own precautions, including all care costs, should come first before you start planning for your children. And talk to your children so that they are not suddenly faced with a financial responsibility that they are not up to.
The topic of relationships is also part of family financial planning. Talk about what happens if one of you dies prematurely (keyword: will); if you separate (keyword prenuptial agreement); if you both die; if one of you becomes ill or unemployed. Of course, you don’t have to assume the worst case scenario everywhere, but thinking through a few scenarios makes a lot of sense.
Death is not a topic that most people like to talk about. It is essential! How do you imagine your retirement? What should happen to your house, to your assets? The more you have to pass on, the more important it is to have a clear strategy, to put it in writing (here also the key word will) and to discuss it with your heirs. Otherwise you risk your heirs getting into trouble after your death. I would almost call it negligent not to write a will; Unless you only have cash that can be easily divided or there is only a single person entitled to inherit.
Also consider transferring gifts early on. This not only saves you inheritance tax (the tax exemption applies for a period of ten years), but you also endear yourself to your heirs. Because when in doubt, people are more happy about an inheritance at 30 or 40 than at 60.
A marriage contract that was drawn up carefully and fairly at the beginning of starting a family can be enormously unfair 15 years later. The same applies to a will. Life has a way of throwing plans into disarray. So sit down every five years and discuss what your planning looks like and whether this planning still fits in with the financial planning you have drawn up. If not, you should adjust your planning accordingly.
There are a variety of aspects to consider when considering intergenerational financial planning. Life sometimes goes differently than planned; It is all the more important to be well positioned within the family.
Note: This article first appeared here at Capital.de.
