When we envision a will being read – one that passes wealth from one generation to the next – we don’t usually think of it as a frightening scene. 

But it can be.

It’s scarier than it sounds for someone to suddenly be put in charge of wealth that he or she did not earn and knows nothing about managing.

Sure, it can be exhilarating to suddenly have more money than before.  But what comes next? 

It’s nice to think that if you leave your heirs with a large sum of money they’ll be secure with a stable financial future.  But that’s not always the case.  They may not know how to manage such sums, they may not have trusted advisors to help them, and they may not share your vision for how to put the money to use for the future.

Heirs often opt to pay off their mortgages, or set up long overdue retirement plans, or sell existing residences and acquire long-desired superior homes.  Those are not necessarily bad decisions.  But, all too often, the inheritors make those decisions without seeking proper counsel from attorneys, financial portfolio managers or planners, CPAs or real estate professionals – to minimize their tax burdens and maximize their opportunities.   

Here are some steps you can take to prepare your heirs to successfully manage what you leave behind.  These are relevant no matter the size of your estate. 

Evaluate your family’s abilities to handle inherited wealth. 

  • Can they manage alone or do they need the services of advisors?  If so, be sure that your planning provides for this.  
  • Do your inheritors need time to acclimate to their inherited wealth?  If so, you can structure your trusts and/or wills to require a certain amount of time before the wealth is to move into their hands.  
  • What about your existing business or real estate holdings?  Have you made provisions as to which of your heirs is to continue the operations for the benefit of whomever you have chosen?  Make sure your inheritors are aware of your team of advisors, trusted money managers, investment advisors and anyone else whose management responsibilities you wish to retain.

Write a Personal Legacy Statement

A personal legacy statement is a document that is not legally binding, but that provides you with the opportunity to tell your own personal story to beneficiaries of your estate.

The legacy statement can focus on a history or a family business, including the goals and principles upon which it was founded and the ideas upon which the business was managed.  It is especially helpful for the beneficiaries during business succession, as it gives them firsthand knowledge of the founder's hopes and dreams for the company and of the "why's" and "how's" of the founder's major business decisions.

For others, the personal legacy statement is an ethical will.  Again, it is not a legally binding document, but is one that tells your personal story, including dreams, goals, successes and failures.  The ethical will explains what has been important to you and why.  Many people chose to include hopes and dreams for future generations – not to dictate what their choices should be, but rather to impart the moral and ethical principles they hope their heirs will follow.

A mother and father may write a personal statement to each of their children about themselves, about their history, and about how unique and special each of their children is to them.  It’s an opportunity to tell children what you hoped to have accomplished during your lifetime; what was important and what was not so important; and what you hope your children will take from your personal story.

This kind of statement also offers the possibility for a family to heal old wounds and resolve old conflicts.  Without some attempt to repair relationships, it is extraordinarily difficult for heirs to work through old bitter, unresolved family relationships with parents and grandparents after these important people have died.

The bottom line:  taking care of your heirs means more than leaving them money.  It means leaving them some guidance, as well.

You may have thought that your job was done when you met with your estate attorney, your investment advisors and your CPA, and completed all of your documentation as it relates to estate planning and tax savings.  And yes, that was a giant step forward.  But you are never finished with legacy planning.  

Life changes daily.  People change, you change, ideas change, values change.  People marry and divorce; people die.  While you are here you have the ability to make decisions that can alter not only your life but the lives of your loved ones.

In meantime, live your life to the fullest everyday, enjoy the fruits of your labor, and hope and pray that your values are included in the next generation’s life planning.