Talking about money within families is always a sensitive subject. Inheritance can be a complicated process to plan and a difficult subject to discuss. The layers of complexity and risk of conflict can grow when the estate in question belongs to a high-net-worth individual. This is why an experienced wealth management firm will always encourage transparency and open discussion to help smooth the way for effective legacy planning.
Legacy planning is often reduced to leaving everything as a lump sum through a will after someone has passed away. But there is a strong case for involving children early in intergenerational wealth planning and even for bringing them to meetings with financial advisers. It is always worthwhile taking into consideration the feelings and wishes of beneficiaries so that there are no unpleasant surprises waiting for them. While loved ones may benefit from a windfall, the process can leave them unprepared for dealing with an increased level of wealth. On the flip side, some family members could feel disappointed with being left out of the will.
The benefits of openness
Involving your children in estate planning can help them become better prepared for their inheritance and feel their opinion is valued. Bringing them into financial planning meetings means they can ask questions, air any grievances and generally become more involved in their own legacy. This open dialogue could lead you to allowing your children to inherit earlier or getting started sooner on their philanthropy plans. It could help you decide who is best placed to inherit a property that needs maintenance or understand who places the most value on family heirlooms so you can allocate them accordingly. These are just some of the considerations that might be necessary to structure an estate more effectively. Not only will this mean your children feel more involved, but they may be able to use these lessons in dealing with their own finances.
Increasing the financial literacy of your family can be very useful when dealing with inheritance. Understanding what is actually contained in the family estate is important to managing expectations. If you have an investment portfolio, for example, this can increase or decrease in value, and making sure your family members understand the risk levels involved could head off any misunderstandings. If you are handing down a property portfolio, this is also an asset class that has its own risk factors, so communicating potential upkeep costs, for instance, would be a sensible move.
Anyone that is reluctant to be more open about their estate planning during their lifetime should consider that it could make for a much less stressful retirement. The burden of managing your own affairs could start to weigh heavily as you get older and sharing this strain might be a welcome relief. Assessing the different attributes that each family member could bring to the planning would allow you to allocate assets and responsibilities more efficiently. Consulting with family members to understand their wishes when it comes to inheritance means that everyone is likely to be more satisfied with the outcome.
Avoiding the courts
One of the most important reasons to open estate planning up to family members is that a badly handled inheritance can lead straight to the courts. Aside from the heavy legal bills involved in lengthy will disputes, these disagreements can run deep and cause lasting family rifts. Such disputes are especially difficult to resolve as the former owner of the estate isn’t around anymore to clarify decisions or answer questions. An open dialogue and early transparency can help head off potential legal challenges.
At London & Capital, we encourage our clients to engage with their loved ones about these topics and as a firm we welcome family members’ presence at meetings. We understand the role that money can play in a family and how it can influence a legacy for generations to come, so our advisers always consider intergenerational wealth planning. If you are thinking more about your estate and want your family to be as prepared as possible, contact the London & Capital team today to enquire about a family meeting with one of our advisers.