Not too long ago, we shared many of the following thoughts with clients in a newsletter. But the topic of responsibly handling and communicating your estate plan is one that never goes out of style, and we thought it would be helpful to underline many of these important ideas here, on our blog.
The fact is, most people would rather discuss almost any other topic than what happens with their estate when they die. And as hard as it is to have that conversation with a financial professional, lots of folks find it even harder to talk about these matters with their children. There are a number of reasons why these types of conversations can be difficult, but one of the more common ones is that wealthy parents are afraid that discussing a potentially large inheritance could rob their children of the motivation to succeed on their own merits.
This is an area, however, where silence is rarely golden. For one thing, parents may be making assumptions about their children and their attitude toward wealth that are unwarranted or inaccurate. For another, children are typically more observant than their parents often understand. Avoiding the discussion in order to “not let the kids know we’re wealthy” is not very effective, because children learn from a very early age the differences wealth makes in households. Especially in an age when almost any information is available online—as long as you know where to look—keeping family wealth “secret” from future heirs is difficult, and may even be harmful if the children feel they can’t be trusted with such important information.
Transparency Matters
The good news is that the benefits of clear communication far outweigh the drawbacks. For one thing, the more that heirs and beneficiaries of the estate can understand in advance about their parents’ arrangement and intentions, the better equipped they will be to serve as good stewards. Generally, the more your survivors understand about your intentions, priorities, goals, and plans for your estate, the less stress and uncertainty they’ll have to deal with when the time comes for your estate plan to go into effect. The attitude typified by “Daddy’s dyin’; who’s got the will?” may make for an interesting movie plot, but in real life, there should be no mysteries surrounding your final wishes for your estate.
In fact, open, honest family dialogue around estate planning can provide important opportunities to empower the next generation, to articulate and pass on family values, to build a stronger foundation for a multigenerational family legacy, and even to take maximum advantage of tax and legal strategies that can benefit both the estate and its beneficiaries.
Getting Started
So, how can you get past the awkwardness on both sides of the table and start having useful conversations with the next generation concerning inheritance and estate planning matters? While these conversations can feel difficult—because, after all, who enjoys discussing their own mortality or that of a loved one?—here are some important principles that can make it easier to get started.
- Be clear about your own motives. What are your desired outcomes, and why? What makes this topic important to you.
- Understand that talking about “final matters” may be harder for some than others. Timing can also play a part (discussing disposition of personal property right after a funeral might not be the right choice).
- Try to listen at least as much as you talk.
- Use “what if” questions: “What if your mom and I were no longer able to live here unassisted? What would you want to have happen?”
- Watch for naturally occurring moments that can lead to helpful discussions. Perhaps a family friend or relative is working through the process of transferring assets from one generation to another; you might ask, “What if that were to happen in our family? How do you think we should handle it?”
- Be alert to varying attitudes, feelings, and opinions that may be held by different family members, even in the same generation. Conversations should be aimed at learning about areas where disagreement exists, in order to work though the matter in a way that respects everyone.
- When someone raises the issue, be willing to listen and discuss.
- Remaining silent typically deprives others of the opportunity to know your thoughts and beliefs.
Bring in a Professional
It’s also important to remember that you don’t have to go it alone when communicating your wishes and intentions to the next generation. A trusted financial or legal advisor can often serve as an impartial voice in the conversation, bringing all parties’ intentions and opinions into the open in a way that is less threatening or “personal.”
For example, many times it is assumed that the duty of executor will fall to the oldest child or another trusted family member or close family friend. But this often creates an undue burden on someone whose only qualification is emotional attachment. Especially for estates with complex holdings—real estate, closely held businesses, and other assets that may even be in different states or countries—the probate process and disposal of assets can be very time-consuming and complicated. Often an institutional executor is the best choice. Experienced executors can also become an important source of information and guidance to heirs and other interested parties.
Mathis Wealth Management understands that just as each individual investor is unique, each family and estate is unique. Any plans you make to pass on wealth, whether to children and grandchildren or to fund a cause that is important to you, should be a precise reflection of what is most important to you and the legacy you intend to create. For that reason, our fiduciary standard of care requires us to always make recommendations and provide guidance that place the client’s best interests foremost. That means that the most important service we provide is listening in order to thoroughly understand each client’s individual goals and priorities.
To learn more about our estate planning services, click here.
