Having the ‘Inheritance Talk’

It wasn’t easy for you to talk to your kids about sex, drugs and being safe on the Internet, but you managed — whether with red faces or not. But when the subject turns to inheritance, many would rather have a root canal than talk about family money.

Telling children how much they stand to inherit is fraught with what The Wall Street Journal calls “emotional land mines.” Parents who came from much more modest means might feel guilty about their wealth. They worked hard for their money and don’t want their children to lose their work ethic

There’s also the thorny subject of who inherits what, and how much. Not talking about it can lead to confusion, mistrust and heirs ill equipped to manage wealth.

Despite these obstacles, experts interviewed by The New York Times say it’s important for parents to talk openly to children about money because failing to do so brings with it its own set of problems.

The Etiquette Of Discussing Money With Family

Is there a “best way” of approaching the conversation about wealth with your family? We found an interesting article from the AARP, interviewing etiquette expert Peggy Post of the Emily Post Institute about this issue.

Post says there is no set “blue print” to follow for every family. Before money is left to heirs, Post suggests having one-on-one conversations with the children. It’s also important to have group meetings so everyone is on the same page.

Dropping the news all at once can overwhelm and dumbfound heirs who had no idea of the scope of their inheritance. Sudden wealth can be a burden.

Developing a family mission statement can help heirs know what a family’s values are regarding money. Also, holding regular family meetings can reinforce those ideas. Sharing stories about how the wealth was created lets the kids know the money didn’t come out of thin air.

There’s going to be a lot of money transferred in coming decades. Baby boomers will leave their children more than $30 trillion in the next 30 to 40 years, The Times says.

The Blank Check Exercise

Parents need to assess their children before revealing too much information, The Wall Street Journal says. What is their level of financial responsibility, ability to think in an adult way and adjust to a potential large inheritance?

Hand them a sheet of paper and tell them to pretend it’s a blank check and to write down what they would buy if they had the money now. If they say a sports car or a wardrobe from Mercedes-Benz Fashion Week, then clients know more mentoring and teaching is called for.

It's All About Communication And Planning

Deciding how assets will be divvied up can be a chore. Should everything be equal? What if one child is active in a parent's business working for below market salary with the implied understanding that the business will be “left” to him or her? What if it's a blended family? This is why working with a professional team of advisors is critical in thinking these issues through. Unique family dynamics call for unique planning strategies. In the end, it comes down to great communication within a family and thoughtful legal planning.

New Guide For Talking With Your Family About Your Estate Plan

I have written a new guide to help people tell their loved ones about the plans they've made for their estates. It's called, “Here’s the Plan: How to Tell Loved Ones What You’d Like to Happen.” This booklet presents a step-by-step blueprint for explaining to the people who will carry your plan out for you how that plan is supposed to work. In it, we revisit the design decisions you may have made while planning and explore why you made the decisions you did.

If you or someone you know doesn’t have a plan yet, this booklet is still meant for you. 6 out of 10 Americans still don’t have a plan in place to safeguard their assets, themselves, and their loved ones. In this booklet, I discuss what estate planning tools are available and how these tools work together to protect your assets and loved ones. We want to get people thinking about what’s important to them and how to accomplish it. Most people who haven’t done their planning yet aren’t aware of what a well-designed plan can achieve. Among some of these strategies include how to safeguard assets from creditors and lawsuits; pass down assets in the most tax-efficient way possible; make sure an ex-spouse cannot disinherit adult children, and much more.

You can get your copy of this booklet right now at https://www.carolinafep.com/reports/heres-the-plan.cfm I hope this resource helps start some valuable conversations with your family.

We hope this information is useful to you. If you have a specific case or a question, please call our office at 919-443-3035.

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