Successful Estate Planning, Part 2

Bob Carlson

In an article I wrote last week, we learned that allocating the estate is the first step of planning.

For this or any other estate plan to work, the children and any other heirs need to be informed of the plan early. They need to be prepared to handle the assets.

That involves regular communication and education. The best estate plan on paper doesn’t work if the assets and plan are dumped onto the children without any preparation.

Most people don’t involve their children in financial matters early enough. Parents should be talking with their children about money from an early age, but it’s never too late to start.

First, you need to be clear what the wealth means to you and what its purpose is. They also should know in general what’s important to you and what you value.

Finally, you need to consider how you communicate and how others in your family communicate. Everyone has a different communications style. When the styles don’t mesh and no one tries to modify his or her style, there is no communication.

Consider how your family members communicate and decide if your style can be modified during family get-togethers to improve communication. Ideally, this leads to a process in which the children are involved in decisions about the money.

This should be a gradual process. You want to impart your values and experience and teach the children about handling money.

But you’ll definitely want a transition, because you don’t want decisions made that endanger your lifestyle or wealth. Many people find a good early step is to involve the children in choosing the objects of family charitable gifts.

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At some point, your financial advisors meet the family and explain their roles. Some financial professionals also like to meet separately with family members so they can learn things people aren’t willing to say in front of other family members.

The estate planner could explain the current plan. An investment advisor can explain the portfolio and the strategies for it. These experts might explain things and answer questions better than the parents can, or family members might be willing to ask questions they wouldn’t ask a parent.

Very wealthy families that are successful in perpetuating wealth and family unity establish a formal process.

For example, they often form a family council and might have a family charitable fund with a board of family members that chooses the gifts. Additionally, they may have experts on family wealth moderate discussions in which the family participates.

Of course, not every family needs a formal process like that. But every family should try to establish multi-generational communication on these issues. Most estate planners can help with the process or refer you to someone who helps with the process.

You also can contact The Heritage Institute (TheHeritageInstitute.com) or read the organization’s novel, “What Matters,” by Cam Thornton and Rod Zeeb.

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