(Travel Awaits) - Inheritance is a complicated issue for many families. One of my clients was thankful for the money from his great grandfather, but didn’t understand why he had to wait when he could have used the money sooner. He also didn’t know that side of the family as well, so the whole thing made him uncomfortable.
When I thought about his comments, I could see his point and empathize. This is another reason why inheritance, whether it’s money or a family business, rarely goes past the second generation. The stories of the family, the values, what happened to attain the money, and the purpose of the inheritance is lost because time was not taken to plan or communicate. In my 24 years of helping clients and families, I have seen the unfortunate squandering and lack of direction when inherited family wealth occurs. But, it doesn’t have to be that way. I’ve found that a few pointed topics can guide a family and prevent confusion.
1. Discuss Family History
As you have read about my client’s situation, family history is important. The goal is to prevent confusion for your family as you decide on your assets and inheritance. Most children and grandchildren are interested in their family’s origin, and this includes careers and any legacy planning. The origin of the inheritance, along with stories about hard work and sacrifice, typically encourages future generations to appreciate it more. One of the best ways to start the conversation is to answer a few simple questions during a family meeting. This should be a fun, relaxing time for your children and grandchildren to listen and ask questions. It’s better to discuss this now rather than after you’ve passed away.
Pro Tip
Three Important Questions to Ask:
1. Are you planning to leave any inheritance?
2. What is your reasoning behind your legacy plan?
3. Why are you discussing it now?
2. Explain Your Wishes
The best way to discuss your wishes with your family is to share your values and the mission and purpose of the money you have inherited. Then, paint a vision for the family. Your family may be confused about your decisions, so take the time to listen to their concerns. Avoid confrontational language, but allow them to voice their questions. If you don’t understand what they are asking, have them clarify their question. Do not react to any of the questions regardless of how you feel. Remember, they are entitled to their opinions and feelings as well.
Pro Tip
Make a list of the top issues you want to verbally cover with your family. You don’t want them to hear about your wishes being read by a stranger in your last will and testament! Your family should know your financial wishes, health directives, living arrangements, funeral wishes, and where to find all your important documents.
3. Show Them Your Documentation
Where you keep your information is just as important as your assets. I can tell you, from losing two parents in a short amount of time, it was crucial to understand where all of their essential documents were located. You’ll want to make sure your family knows your estate planner’s name and number, your financial advisor’s name and number, your bank account information, any pension information, the deed or note on your home, the executor of the estate, your legal name, and your social security number. Be sure to keep all financial documents and planning notes in a secure location where only you or an authorized individual can access them.
4. Seek Professionals Help
You always need estate planners and financial advisors, the key is when to bring them in. Sometimes, they are a great third party that can guide everyone. I have had several meetings listening to the goals of each party, and I can bring everyone together without a bias being in the family. It gave the family an opportunity to have a listening ear. The key is to bring in advocates or experts who are great listeners. You don’t want to invite financial advisors or estate attorneys because you think you should, or someone told you to include them. You should add them to the conversation if you think they can help move the process forward.
5. Involve In-Laws
This might make you think, you’re kidding, right? I’m not. In-laws can be very helpful in this process. They can provide feedback from their own experiences or may be able to add additional information to the conversation that you may not be aware of. The question to ask is do those in-laws share your family values? Do you want their opinion or feedback? Only you can answer those questions.
I want to leave you with one final question to ask: What is the purpose of inheritance in your family? Everyone will have a different answer, but within those differences lies the answer to one similarity. Those answers will provide clarity and purpose and guide you to a plan that can be accepted by your family while leaving your wishes intact.
By Kevin Dooley (CFP, CAP, CASL, CHFC, CLU)
May 14, 2022
