It can be difficult to talk about inheritance
44% of wealthy parents haven't told their children what they will inherit.1
Talking with family members about your inheritance and legacy can be challenging. Barriers to talking about inheritance include:
Uncertainty regarding inheritance objectives, or not having an estate plan ready
Concerns about diminishing children’s motivation
Worries about creating conflict among heirs
Heirs often avoid broaching the topic because they don’t want to discuss their parents’ mortality, or are worried about sounding greedy.
what are the advantages of discussing inheritance with family and heirs?
Heirs will be more prepared for their own financial planning knowing what inheritance, if any, they might receive.
Heirs will have greater opportunity to develop skills and knowledge to manage their inheritance effectively. Transferring knowledge and wisdom along with financial assets is very important: Studies show that 70% of wealthy families lose their wealth by the second generation.2
Opening communication about inheritance can create opportunities to explain any difficult issues and to reduce disagreement and conflict among heirs.
How can i communicate my inheritance and legacy wishes?
Create a mission statement
Your inheritance and legacy plans should be guided by your family’s core values. Developing a family "mission statement" can help heirs understand what is fundamental to your family’s success and well-being, and how you want your legacy and inheritance to be shepherded for future generations.
Decide how and when assets of financial value should be divided
Many families choose to divide assets evenly among heirs, and this is often a good solution to avoid feelings of unfairness. But every family has unique circumstances. Some parents may want to allocate more to a child who has greater financial need or who has acted as a caregiver to a parent. Increasingly parents are sharing part of their inheritance while they are still alive, to benefit adult children when they need it most. Blended families can create other complications. Talking through your options with an advisor can help you find a solution that addresses your specific family dynamics. Good communication is very important and can help everyone understand the choices you make.
Decide how assets of emotional value should be divided
Often the most contentious aspects of inheritance can be the distribution of possessions of emotional value, such as grandma’s engagement ring or the family art collection. Talk with your children and heirs about what they value most. This conversation can lead to productive and meaningful conversations about family memories and values. Some families find it helpful to list out valuable items and then let each child or heir choose a possession in turn, in order to give everyone a fair chance to select what matters most to them.
Hold a family meeting
You may want to draft and distribute a summary of your will or estate plan, then have a meeting to review with your heirs. Be ready to explain your overall goals for your legacy, and address concerns in the context of your mission statement, goals, and values. It can be helpful to have your financial advisor participate to help explain financial goals and moderate parts of the conversation.
Keep some topics confidential
You may decide that certain topics are better not to share with heirs (or some of your heirs) at this time.
Keep the conversation going
Sharing your inheritance and legacy is an ongoing process. An annual conversation, perhaps scheduled around family holidays, can help ensure everyone understands and is on board with family needs and goals. Including grandchildren in the conversation can help develop a healthy ongoing tradition of legacy discussions.
I would like to learn more about...
Strategies to talk with my family and heirs about their inheritance
Creating an estate plan that will achieve my legacy goals
Determining how much inheritance I want to leave while also funding my retirement goals
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1. CNBC, "Wealthy parents fret over ‘inheritance talk’ with kids", 2015
2. CNN Money, "70% of Rich Families Lose Their Wealth by the Second Generation", 2015
This publication is designed to provide general information and is for discussion purposes only. The effectiveness of any strategy is dependent upon each individual’s facts and circumstances. This article does not provide legal, tax or account advice. Because of the possibility of human or mechanical error, the accuracy, adequacy, completeness or availability of any information is not guaranteed.