Overcome the Biggest Hurdle in Estate Planning

The issue of inheritance has a high probability of stalling your client's estate planning, regardless of how far along they may be. Some families never get over this hurdle.

It’s not just the amounts. It’s about how money impacts productivity, fulfillment and happiness. It’s about how money impacts relationships now and in the future.

There’s no road map to estate planning bliss. Every family has different terrain to cover.

Let me share a process that may help your clients navigate these hazardous waters.

Clarify your values

It’s easy to get distracted. Attorneys talk about a host of technical planning benefits. Tax savings. Probate avoidance. Asset protection. Privacy. Even dynastic wealth.

While these benefits may be important, they aren’t values or principles.

So take a step back. Write down values that are most important to you (e.g., education, meaningful work, family togetherness, service, charity, spirituality, etc.). If you’re married or have a partner, you can do this together.

Let your list sit for a few days. Then go back. Add detail. Narrow it down to your core, guiding values. Continue to edit.

When it feels authentic and complete, move on to the next step.

Open a dialogue

You may have already started these conversations, or perhaps they have brought it up to you.

Either way, tell them you are working on your estate planning. Share your guiding values. Resist the temptation to go into details (e.g., dollar amounts, trusts, etc.).

Find out how they think and feel about an inheritance. You may want to begin with questions like:

• What would an inheritance mean to you?
• How would an inheritance be helpful or challenging to you?
• How would an inheritance impact your relationships with your spouse, children, siblings?

What are you learning from them? Where do your values overlap and where do they not? What concerns do you share?

Design a plan

With a better understanding of your family’s perspective, you will be able to design your estate plans much more effectively and efficiently.

The amounts for each family member will be much clearer. You will understand whether the inheritances should be in trust, outright or a combination of both.

You will have a better sense for the flexibility and protections your family will need. You will know whether you should make gifts sooner or later.

And it will be easier to choose which strategies—GST-exempt trusts, CRTs, ILITs, GRATs, etc.—you should leverage to accomplish your family’s objectives.

Communicate your plans

Whether one-on-one or in a family setting, communicate your estate plans to your family.

You may want to restate your guiding values. And describe how you incorporated shared values, desires and concerns into your decisions.

You don’t have to go into the details. But explain the general structure of your estate plan, how it benefits the family and who will be involved (e.g., trustees, advisors, attorneys, accountants, etc.).

Consider writing a letter that expresses your guiding values and shares important personal history, stories and experiences. You may want to read this in a family setting or include it with your estate planning documents.

Your legacy letter will serve as a guide for trustees and beneficiaries, as decisions about the estate plan are made for your family. 

This process is built on principles of authenticity, openness, preparedness and transparency. It can help your clients organize their thoughts and feelings, deepen family relationships and ultimately carry out their estate planning with their family’s best interests in mind.

Dave Jones is director of estate strategy at Bailard.