by Randy Fox
It is common for financial planners (like me) to guide my clients into and through the estate planning process. The theory being that a good, well written, well considered estate plan will smooth the transfer of assets from the current generation to their heirs. That good planning, good documents, clear intentions and clear instructions will make all the difference. The bad news is, that documents alone aren’t enough. A good “plan” is not enough. What does it take? Well, several things.
First, communications and understanding. My experience with families indicates that talking about money is uncomfortable for most families. Talking about “the inheritance” is forbidden territory. It’s unfortunate but too true. Nonetheless, handing over any amount of money or other assets to unprepared heirs. Whether the money is given in trust or outright is somewhat irrelevant from a preparedness standpoint. Seriously, do the heirs know what a trust is and how it works?
When should the communication begin? Early. As early as there is the ability to understand some complex concepts. Financial responsibility and financial literacy are incredibly important gifts to give our children. Yet, most families talk less about finances than they do about sex. And, they don’t talk about sex much.
Certainly, contemplating one’s mortality is not a favorite past time for most. However, no matter what we hope, it is inevitable. Transferring legacy, the more than money part, can be truly rewarding and a way to keep children engaged and together in a more cohesive way.
No, it’s not an obligation to prepare your heirs. Maybe it’s ok to expect that stack of documents to do what you paid for. But do you really think that will happen?
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