Consider sharing your plans and information about finances with your family now. Some folks feel the need to let their doctor figure out what’s wrong with them, claiming that it’s the doctor’s job. They’re often the same ones who won’t tell their heirs everything. However, as Vanguard advises in the article, “The final keys to successful wealth transfer,” honesty can spare your family a lot of trouble.
It’s hard for many of us to easily disclose personal details about our finances. That’s because money can represent a variety of complex feelings and concepts, like security, control, comfort, selfishness and power. However, it’s imperative to have this important conversation.
You can start by relaying stories about your successes and losses (financial and otherwise). That way, your heirs can learn from your experiences. In addition, even if you detail specific conditions regarding when and how heirs can use their inheritance, you should look at the wealth transfer process with trust and an open mind. You should educate your heirs to make smart financial decisions after you’re gone, by showing them materials to prepare them for the future now.
Have the talk with your heirs when it’s right. If information about a future inheritance might distract them from making wise decisions about their future, you don’t have to disclose specific dollar amounts. Every family is unique, so there’s no one-size-fits-all solution to the question of when you should have “the talk.”
You should also use the counsel of an experienced estate planning attorney who doesn’t have a stake in your legacy and can facilitate the wealth transfer discussion. That will take some pressure off and ensure that all topics are discussed.
A final key to a successful wealth transfer is philanthropy. All family members should be able to participate in the giving process. Finding a charity that matches up well with your family’s values can help your heirs learn how to make decisions, motivate others, and develop confidence. These are attributes that will help them be respected stewards of your wealth, when the time arrives.
A successful transfer of wealth and family values requires clear and honest communication among family members and planning in advance.
At our office, we often conduct "Fire Drills" or meetings that include the family and the attorney who drafted their estate plan. The attorney can explain the specific documents and heirs can ask questions and understand what the plan will do, and how they may be responsible for executing certain parts of it. The parents can share as much or as little detail on dollar amounts as they are comfortable with, but if a son or daughter ever has to act as a Trustee, at least it won't come as a total surprise. It can also give the family some level of comfort to have met the attorney involved in the process so if a family member passes away, they are not calling on a complete stranger for help.
This process is also helpful in the event that a client suddenly needs help managing finances during a medical crisis. It can be very hard to step in and manage assets and pay bills with no idea of where the money is kept or how much there is. Sooner is better than later to start talking as it seems to get more difficult as we age.
Reference: Vanguard (September 26, 2017) “The final keys to successful wealth transfer”