Transfers of wealth require planning, family conversations
It is a concern that parents often have as they get older: how should they speak to their adult children about estate plans and wealth transfers without causing stress or familial strife? Unfortunately, some parents simply choose not to have these difficult conversations, which can be a tremendous mistake, particularly in situations involving significant assets.
According to some experts, the years between 2007 and 2026 will see almost $15 trillion transferred from one generation to another. By some estimates, nearly 70 percent of all generational transfers are flawed in some way and result in a loss of funds. Common problems can run from poor investment decisions to mismanagement of funds.
In most cases, these sorts of problems can be avoided simply by providing information to heirs in the years before the transfer occurs. Not providing heirs with the support they need early on can leave them unprepared for the emotional and mental challenges of making decisions about managing large sums of money.
Most parents avoid discussing monetary and inheritance issues with their children not only because they are uncomfortable bringing it up, but also because they fear it will cause conflict. This approach has it backwards, however: in most cases involving conflict over an inheritance or estate plan, parents have made no effort to explain or discuss their plans in advance. Even if each child is not going to receive the same amount of the estate, explaining what a will or estate plan is in advance can reduce the incidence of arguments or challenges when the transfer occurs.
Aside from cash assets, it is extremely important to have a discussion about heirlooms and who parents wish to receive each specific item. Jewelry, wedding china, and other similar items are frequently the subject of disputes among siblings after their parents pass away. Again, not every child may get what he or she wants, but having the conversation in advance can help prevent disputes in the future that occur when parents have no input.
Consulting with an attorney who has experience preparing estate plans should also be seen as an essential part of the planning process. An experienced attorney can not only help couples avoid issues related to mismanagement, but can also help make sure that their wishes are honored and that transfers occur as originally planned. Those with questions about the estate planning process should consider making an appointment with an estate planning attorney today.