Succession Fireside Chat: Should you tell your family members how much the family is worth?

Talking about money can be uncomfortable. Many family business owners struggle to balance their financial success with maintaining family harmony — and you may be wondering how to approach discussing your finances with your family members. Should you tell your family members how much your family is worth?

In the sixth episode of our Succession Fireside Chat series, MNP’s Lynne Fisher and Danielle Bergeron-Walsh explore how to talk about your family’s worth with your children, how to teach financial responsibility, and set expectations around your family business.

They also explore how avoiding this subject can impact the succession process, and how to approach discussing your family’s worth when your successor is not aware of your financial situation.

How to overcome challenges during the succession process

Many family business owners choose to keep their family’s worth private to maintain harmonious relationships — however, this secrecy can cause significant challenges during the succession process. Avoiding honest conversations about your financial situation leaves your successor unprepared when they assume control of the family business and they may not have developed the skills or knowledge to manage your family’s finances.

Talking about your family’s worth late is better than never discussing the situation at all. These best practices can help your successor gain a better understanding of your financial situation:

Start small

It may be tempting to give your family members all the information they need at once — especially if this is your first time discussing your family’s finances. However, it may be more effective to share information in bite-sized pieces as it comes up naturally in conversation. 

Plan your discussion

Consider discussing your finances at certain times of the year when your family gathers together. Make sure to communicate that you intend to discuss the subject in advance and create an agenda so that everyone is prepared. Document the conversation and record agreements to enable family members to refer to it later.

Find your comfort level

Different members of your family have different levels of financial knowledge. Your family members may not have the experience to discuss complex topics about finances just yet — and it is important to communicate at their comfort level to encourage them to fully participate in the discussion. Hold one-on-one conversations with your family members to determine their comfort level before you coordinate financial meetings with your family. 

Bring in a third party

Talking about finances can be uncomfortable — and you may not be sure of the best way to approach the topic. A third-party advisor can help alleviate stress around these conversations and help to facilitate productive discussions. Additionally, an advisor is a neutral party who can navigate complex family dynamics and support negotiations.

Take the next steps

While the topic may be difficult, it is important to start talking about how much your family is worth with your children early. This will help nurture their financial management skills and set parameters around how the money from your business is used.

If your successor has not been included in discussions about your family and business’ financial situation, prioritize starting small, planning your discussions, and determining their comfort levels. Bringing in a third party can also help set your successor up for success.

For more information, contact a member of MNP’s Succession Services team. We have the experience to help you build a succession strategy to minimize risks, capitalize on what you’ve created, and secure the future you’ve worked so hard for.