Starting The Estate Planning Conversation With Your Children
You wouldn’t give your teenage daughter the keys to the car without teaching her how to drive, would you? So, why not take the steps to prepare your family to receive their inheritance when you pass? Between 2007 and 2026, more than $15 trillion will be transferred to the next generation.
“There’s a 70 percent failure rate when transferring family wealth from one generation to another,” due to poor investment and mismanagement of the assets, according to two of the founders of the Institute for Preparing Heirs. In many families, one child may have challenges handling money, including emotional, physical, or mental challenges. While this particular child may need a separate plan for handling his distribution of the estate, a general conversation with the entire family is essential to preparing your heirs. Transferring inheritance in protected trusts can held solve some of these problems by safeguarding the inheritance from creditors and future divorces.
Most parents would prefer to avoid discussing money with their children and family members. However, this is the heart of the problem. When guided by family values, parents can initiate a productive conversation in which each child can discuss what is important to them, and the family can come to an agreement on how things will be divided. After a cooperative meeting, well in advance of actual wealth transfer, parents should have an attorney draft an estate plan that fulfills these goals. This provides an opportunity to further discuss with grown children their anticipated roles in the future distribution of the estate.